ABDUL JABBAR QURESHI, MEMBER JUDICIAL-I.----By this Judgment, we dispose of Appeals Nos. H- 794/2022 and H-796/2022, filed by the appellant against Order-in-Original No. 44/2022 dated 21.02.2022, passed by the Collector of Customs (Adjudication), Quetta Camp Office @ Hyderabad.
2. Brief fact that the it has been reported by the Directorate of Intelligence and Investigation-FBR, Range office, Sukkur that a credible information was received to the effect that a huge quantity of F/O non-duty paid / smuggled Artificial/Imitation Jewellery would be transported from Quetta to Karachi loaded on a trailer bearing Registration No.SPN-146 (Zhob) mounted with 40 feet Container No.TCKU-9697920. The Intelligence and Investigation Sukkur team intercepted the said Truck/Trailer near Shab-e-Shah Check Post Jacobabad. Preliminary examination of the container was conducted on the spot and found fully loaded with F/O assorted Artificial/Imitation Jewellery.
The driver of trailer introduced himself as Muhammad Ismail son of Abdul Kabeer and was asked to produce legal import documents regarding legitimate import, lawful possession and transportation of the Artificial/Imitation Jewellery. In response, the driver produced following documents: a). A transportation bitty No.133 dated 02-10-2021, issued by M/s. New Baluchistan goods forwarding agency R/o Plot No.B-17 New truck stand Nazar Ganji Quetta. b). Goods Declaration No.QDRY-HC-7821 dated 18-03-2021). c). Release Order vide No.7821 dated 18-03-2021, purportedly issued by Superintendent NLC, Dry Port Quetta.
On the persual of the said import documents and examination report endorsed on the reverse of above mentioned Goods Declaration, it transpired that consignment containing Imitation Jewellery with plastic stones, Hair accessories, Glass bangles, Plastic bangles, China clay imported by M/s. Fazal Impex, Karachi shipped from Iran, was cleared vide Goods Declaration No. QDRY-HC-7821 dated 18-03-2021. However, upon preliminary inspection and cursory checking, the import documents were found irrelevant vis-a-vis artificial Jewellery transported under Bilty No.133 dated 02-10-2021, stuffed in container No. TCKU-9697920 at Trailer bearing Registration No. SPN-146. Since, the detailed examination of intercepted consignment and further verification thereof was not possible on the public place due to insufficient stuffing and de-stuffing facilities, therefore, the said trailer along with container, driver and witnesses were escorted to the Range Office, Sukkur.
Thorough examination was carried out in the presence of driver and Mushirs which led to recovery of 15110 Kgs (G.W approx.). Kg F/O artificial / imitation jewellery fancy electroplated white yellow white stones/beads and metallic lace i.e bangles plastic/metal neck chains, necklace, rings and hairclips etc. The description, quantity and weight value of the said recovered artificial Jewellery were compared with the import documents produced at the time of interception and resultantly, it was found that the import documents did not correspond to said recovered goods. The aforesaid import documents were produced to give legal cover to the smuggled goods and to hoodwink customs authorities. It became clear that the foreign origin goods recovered from the container were smuggled into country through an unauthorized route and no duty and taxes were paid. The goods were transported from Quetta by misusing import documents produced by driver/possession holder. It established that 333 cartons/bags of foreign origin Jewellery (assorted) weighing 15110 Kg (G.W), valuing PKR 17,929,052/-, involving duty and taxes to the tune of PKR 15,905,696/- were smuggled into country through unauthorized route. Therefore, the same were seized along with subject trailer bearing Registration No. SPN-146 mounted with 40 feet container under section 168 of the Customs Act, 1969 for violation of sections 2(s) and 16 of the Customs Act, 1969 and section 3(1) of the Imports and Exports (Control) Act, 1950 punishable under clauses 8 and 89 of the section 156(1) and Section 157(2) ibid the notice under Section 171 of the Customs Act, 1969 was issued to the lawful owner of goods and Truck/Trailer through concerned transport company.
3. A show-cause notice issued and the matter was adjudicated by the learned Collector of Customs (Adjudication), Quetta Camp Office, Hyderabad passed an Order-in-Original No 44/2022, dated 21.02.2021 as under:- "I have examined the case record, perused the reply of Advocate and department giving due consideration to the arguments of both sides. The issue involved is determining the legal status of the seized goods. The Advocate for the defendant(s) stated that the defendant(s) imported Jewellery from Iran under proper documents whereas the origin i.e. Iran was not found mentioned on the seized goods. The defendant(s) tried to smuggle non-duty paid seized goods under garb of Customs Goods Declaration number 1608 dated 18.03.2021 and auction documents. Therefore, I have no reason to disagree with the contention of the seizing agency that the seized goods (Jewellery) were brought into the country through an unauthorized route without payment of duty and taxes. Accordingly, I order for the Outright Confiscation of the seized goods in terms of clauses
(8) and (89) of section 156(1) of the Customs Act, 1969 for violation of sections 2(s) and 16 of the Customs Act, 1969 with SRO 566(1)/2005 dated 06.06.2005.
As far as the seized vehicle is concerned, the same has been used for carriage / removal of offending goods. Therefore, it is confiscated under section 157(2) of the Customs Act, 1969.Howerver, keeping in view the request of the claimant of vehicle that it has a bona fide status, an option under section 181 of the Customs Act, 1969 read with section 157(2) of the Customs Act, 1969 and SRO 499(1)/2009 dated 13.06:2009 is given to the lawful claimant/owner of the seized vehicle to redeem the same against payment of redemption fine equivalent to 20% of the ascertained Customs Value subject to condition that the vehicle is already lawfully registered in the country with the relevant Motor Registration Authority. The seizing agency is also directed to complete verification process regarding legal status/lawful registration of the impugned vehicle and get the vehicle lab tested (FSL) to ascertain as to whether its chassis number/frame is genuine or otherwise in terms of Board's letter No.1(12)E&C/2019 dated 18-11-2019. In case of adverse findings, necessary action may be taken accordingly. These aspects are to be verified by the seizing agency before release of the vehicle. A personal penalty of Rs. 100,000/- (Rupees One Hundred Thousand only) in terms of clause (89) of section 156(1) of the Customs Act, 1969 is also imposed on lawful claimant/owner of the seized vehicle for carriage of offending goods.
The seized container is also confiscated under section 157(2) of the Customs Act, 1969. However, keeping in view the request of the Advocate that it has bona fide status, an option under section 181 of the Customs Act, 1969 read with SRO 499(1)/2009 dated 13-09-2009 is given to the lawful claimant/owner of the seized container to redeem the same against payment of redemption fine equivalent to 20% of the ascertained Customs Value subject to the condition that it has lawful status. A personal penalty of Rs. 25 000/- Twenty Five Thousand Only in terms of clauses (8) and
(89) of section 156(1) of the Customs Act, 1969 is also imposed on lawful claimant/owner of the seized container for carriage of offending goods.
4. Being aggrieved and dissatisfied by the impugned Order-in-Original passed by the Collector of Customs (Adjudication), Quetta camp office at Hyderabad, the Appellant preferred this appeal on the facts of the case and grounds of appeal mentioned in the memorandum of appeal which are available on record.
5. The Respondent Department supported the order passed by the forum below and reiterated the Departmental pars-wise comments submitted through Superintendent, Model Customs Collectorate, Hyderabad copy supplied to the Counsel for the Appellant to go through the same.
6. On the fixed date of hearing, Mr. Muhammad Iqbal Riaz, Advocate appeared on behalf of the Appellant while Mr. Ghulam Muhammad Shar, Superintendent, appeared on behalf of the Respondents. Learned Counsel for the appellant reiterated arguments on the grounds mentioned in the Memo of Appeal and further contended that the seizing agency could not establish that the goods under adjudication entered into the country from the unauthorized route or these were cleared without payment of leviable duty and taxes. The Appellants have discharged their legal obligation/onus by providing all the documents pertaining to commercial imports to establish their view point. The subject duty paid F/o Artificial/imitation Jewellery in question are freely importable into the country. The issue involved in this case is that the staff of Intelligence and Investigation (FBR), Range Office, Sukkur that a credible information was received to the effect that a huge quantity of F/O non-duty paid/smuggled Artificial/Imitation Jewellery would be transported from Quetta to Karachi loaded on a trailer bearing Registration No.SPN-146 (Zhob) mounted with 40 feet Container No.TCKU-9697920. The Intelligence and Investigation Sukkur team intercepted the said Truck/Trailer near Shab-e-Shah Check Post Jacobabad. Preliminary examination of the container was conducted on the spot and found fully loaded with F/O assorted Artificial/Imitation Jewellery and recovered foreign Artificial / Imitation Jewellery with the charge that the same are smuggled goods, not lawfully imported by the appellant / claimant and also non duty paid goods and the contents of the show-cause notice dated 01.12.2021 are denied because same are concocted, fabricated due to ulterior motive better known to them.
7. That even there is no restriction on the inter-provincial movement of the subject goods.
Provisions of sections 2(s) and 16 of the Customs Act, 1969 are not applicable. The seizing agency was duty bound to follow the mandatory provisions of Sections 162, 163, 164 of the Customs Act, 1969 while making the seizure of the subject goods. Since the seizure was made by them in wake of alleged credible prior information. He further contended and argued that if the search is not carried out in accordance with law and the dictum laid down by the Honourable Supreme Court of Pakistan in a number of judgments, then the whole foundation of the case falls to the ground.
Clearly in the instant case search was not carried out in accordance with prescribed provisions of law. The counsel further contended that search could only be carried out by the Assistant/Deputy Director if he believed there is a danger that before a search could be carried out in terms of Section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However, no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondents including the show-cause notice and the impugned order is liable to be set aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act, ibid the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained.
The following case laws is have been cited by the appellant in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside: 2003 PTD 2037, 2004 PTD 2952, 2005 PTD 1933, 2003 PTD 1034, PLD 1991 SC 630 and 2009 PTD 1083.
8. Infact, the subject case has been initiated on the basis of assumption, presumption, conjures and surmises. During the course of hearing the learned Advocate for the Appellant reiterated that the subject goods in question namely Artificial/Imitation Jewellery were duly imported and lawfully cleared from the Model Customs Collectorate of Appraisement, Quetta vide Goods, Declaration No. Declaration No.QDRY-HC-7821 dated 18-03-2021. Release Order vide No.7821 dated 18-03-2021, purportedly issued by Superintendent NLC, Dry Port Quetta, which is also reflecting in the subject Show-Cause Notice.
9. The counsel further submitted that the very issuance of Show-Cause Notice dated 01.12.02.2021(sic) in the instant case is illegal, without jurisdiction and mala fide as the consignment in question was duly examined, assessed to duty and out of charge by the respective appropriate officers of the clearance Collectorates. Goods which are imported through authorized routes and cleared by the importing Collectorates cannot be seized by the Directorate of Customs Intelligence and Investigation-(FBR). Range of Sukkur since they become functus officio with regard to such imported and cleared consignment. Reliance is placed upon the judgment of the Honourable High Court of Sindh at Karachi reported as 2008 PTD 1968 in the case of M/s. Sikandar Enterprises v.
Customs, Excise and Sales Tax Appellate Tribunal where the Honourable Court observed "Even otherwise after the clearance of goods and removal of consignment from the customs area, Customs Authorities were functus officio to reopen the case again as it had become past and closed transaction". The goods have been legally imported but the seizing agency simply ignored the available evidence by stating that production of import documents appears to be an afterthought, the said statement does not bring the offending goods within the fold of smuggling.
Unfortunately, nobody ever bothered to verify the import documents with relevant Goods Declarations on record, whereas on the other hand the documents relating to bilty along with GD were verified to be correct showing the bona fides of the appellants. In these circumstances assumption on the part of the seizing agency was wrong. No notice under Sections 26 and 171 of the Customs Act, 1969 was served upon the appellants by the seizing agency during the seizure of their consignment as it can be seen from the perusal of the Show-Cause Notice dated 01.12.2021. The object of Section 26 of the Customs Act, 1969 was to empower the authority to ask for information or require the production of documents or inspect the same in order to determine the legality or illegality of importation or exportation of goods which had been imported or exported, the value of such goods, the nature, amount and sources of funds or the assets with which the goods were acquired and the Customs Duty chargeable thereon or for deciding anything identical there to.
Authority could only for specific purpose of determining the legality or illegality, call for such information as required under Section 26 of the Customs Act, 1969.
10. The counsel for the appellant further prayed that they have produced import documents about the legal status of description and quantity and have thoroughly examined and found that the subject goods match with the above, import documents. In fact they have complied with the provisions of Section 187 of the Customs Act, 1969 and submitted/ handed over import documents to the seizing agency and it was entirely up to the seizing agency to shift the burden if they found any discrepancy in the documents presented by the Appellants.
11. Cross objections under subsection (4) of Section 194-A of the Customs Act, 1969 were submitted by the department. However, Mr. Ghulam Muhammad Shar, Superintendent, appeared on behalf of the Respondent and stated that the Show-Cause Notice and order passed thereon are well within the ambit of law and passed after the detailed scrutiny of the evidence available on record and as such observations made thereon by the learned Adjudication Authority at the time of passing the Order-in-Original is in conformity with the legal requirements and need not be interfered with and prayed to maintain the Order-in-Original and reject the appeal in the interest of justice. He emphasized that foreign origin Artificial/Imitation Jewellery fancy electroplated white yellow, while stones/break and metallic lace i.e. bangles (plastic/metal), neck chains, necklace, rings and hairclips etc 15110 Kgs as mentioned in the subject Show-Cause Notice dated 01.12.2021 are smuggled one and brought into the country through an un-authorized route without payment of duty/taxes leviable thereon. Therefore, the same are liable to outright confiscation under Sections 156(1) and 89(i) of the Customs Act, 1969.
12. We have heard the rival parties and perused the case record. It is observed with concern that the seizing agency while proceeding with the case has not taken into consideration the material particulars and documentary evidence submitted by the appellant and the adjudication authority has also brushed aside credible evidence placed before it while passing the order against the appellant.
13. Once the appellant has produced evidence of legal procurement of impugned Artificial/Imitation Jewellery imported on payment of leviable duty and taxes, then it becomes the responsibility of the prosecution to establish through independent evidence that the goods were smuggled, but unfortunately, the same was never done except claiming that it was all done as an afterthought by the appellant. Unfortunately, nobody ever bothered to verify the import documents with relevant Goods Declarations on record, whereas on the other hand the documents relating to bilty along with GD were verified to be correct showing the bona fides of the appellants. In these circumstances assumption on the part of the seizing agency was wrong. Section 187 of Customs Act, 1969 provides two conditions as follows:-
(a) When a person is charged with an offence under the Customs Act, burden of proof is cast upon him to show that he had the lawful authority to commit that act;
(b) When a person is found in possession of any goods the burden of proof is cast upon him to show that he was holding such goods under some lawful authority, permission or license, etc.
14. Clause (b) above provides for an eventuality where a person is found to be in possession of certain goods which fall under a prohibited category or which in an unlawful manner find place in the possession or custody of the accused. In such case the burden is upon the accused to show that he falls under some exemption or exception to hold such goods. This type of eventuality as envisaged and stated in clause (b) above is essentially a statement of the general principle of the law of evidence contained in Article 121 of the Qanun-e-Shahadat that whatsoever claims to all under a preferential or exempt or excepted category must show that he fulfills those conditions to fall within that category. This obviously should not be confused with the factum of possession for which no presumption or burden of proof has been spelt out, in view whereof the possession itself has to be proved independently by the prosecution beyond all reasonable doubt. In case of clause
(a) above it is to be determined whether the burden of proof solely lies upon the accused to disprove allegations of misdeclaration and misdescription levelled by the Customs Authorities and whether the Customs Authorities are under no obligation to lead evidence and discharge any onus of proof. This part of Section 187 of the Customs Act, 1969 perhaps appears to be contrary to the general principle of the law of evidence contained in Article 117 of the Qanun-e-Shahadat that whatsoever alleges -existence of a particular fact must prove the same. There is little doubt that a special law of a particular statute can provide for a distinct regime of rules of evidence that contained in general law. In fact the law goes on as far as providing that the laws of evidence can be altered even by mutual consent and contract. However, on a close scrutiny of the provisions of Section 187 it appears that in such a situation it is only the evidential and tactical burden of proof which is cast upon the accused while the legal burden to bring home the allegations remains with the prosecution. This view was upheld by their lordships of the Sindh High Court in the case of M/s. Kamran Industries PLD 1996 Karachi 68. We feel that it is due to operation of the principles of incidence of burdens of proof vis-a-vis "legal" and "evidential" burdens as discussed above that the process of shifting of burden become possible. In this case we are of the view that in the situation in issue i.e. (a) as discussed above, Section 187 casts upon the Appellant only the obligation to make out a prime facie case as it is only the evidential burden which is borne upon it. Once the Appellant was to satisfy this evidential burden, the legal burden to bring home the ultimate cases shifted upon the customs authorities. Reliance is also placed upon judgment of the Sindh High Court reported as PLD 1975 Karachi 458.
15. Before we dilate upon the concept of the two types of burdens of proof and explain the terms "tactical", "evidential" and "legal" burdens of proof we shall first discuss the case decided by the High Court of Sindh in Barkat Ali v. The State (PLD 1973 Karachi 659). In this case the controversy revolved round section 177A of the erstwhile Seas Customs Act, 1878 which catered for a similar situation as has arisen in the present case i.e. the same provided the burden of proof upon the accused to disprove the case of the prosecution that his intentions were not to defraud the exchequer or evade any prohibition or restriction under the Act. Writing for Court Tufail Ali Abdul Rehman, CJ was of the opinion that the said presumption of burden of proof could not be drawn until the explanation of the accused was first taken into consideration. According to the learned Judge the "normal principle" was applicable i.e. that the accused was entitled to a benefit of doubt where he offered a reasonable explanation which was either accepted or raised a doubt. In such cases the burden then shifted upon the prosecution to establish the case." The Honourable Appellate Tribunal in Customs Appeal No. H-801 of 2001 (K-2) dated 29.3.2005 in the case of The Assistant Director, Intelligence and Investigation Customs, Excise and Sales Tax Hyderabad v.
M/s. Ahmed Enterprises and others. The operative part at para-6 of the order is reproduced below:-- "On merits also, the view taken by the adjudicating authority is consonance with the view taken by the Supreme Court of Pakistan in the case of Pakistan v. Qazi Ziauddin reported in PLD 1962 Supreme Court 440 (referred to in the impugned order) and Sikander A. Karim v. The State reported as 1995 SCMR 387. Admittedly, the goods (crockery) were freely importable and were available in the open markets of the country. There was no justification for their seizure in the middle of the country far away from the borders, particularly after production of ample evidence in the shape of bills of entry about their lawful import. It is not necessary to import goods from the country of their origin. They can be imported from a country other than the country of origin.
Therefore, no exception can be taken to the import of the goods of France, Turkey, Indonesia or Saudi Arabia origin from U.A.E. Similarly, there was no justification for doubting or not accepting the copies of the bills of entry produced by the respondent No.2. In the event of any doubt about their genuineness, they could be got verified from the concerned Collectorate/ Customs Station."
16. Evidently in this case such exercise was not carried out, in violation of the principles as discussed above. As per the Show-Caused Notice the appellant imported Artificil/Imitation Jewellery weighing 15110-kilograms vide G.D No. Declaration No.QDRY-HC-7821 dated 18.03.2021. The foreign origin Artificial/Imitation Jewellery was transported from Quetta to Karachi vide transportation bilty No. 133 dated 02.10.2021 issued by M/s. New Balochistan Goods forwarding agency, Quetta. The same was taken into possession and shifted to the State Ware House, Sukkur.
That Artificial/Imitation Jewellery of the appellant was detained under sections 2(kk) and 17 of the Customs Act, 1969 which was subsequently, seized on 19.11.2021 on the allegation that no one came forward to claim the ownership of above Artificial/Imitation Jewellery and to produce documents of legal import and lawful possession. At the time of interception and seizure of Artificial/Imitation Jewellery, the appellant was out of Sukkur. On return of the appellant, he came to know about seizure of Artificial/Imitation Jewellery by the staff of respondent. Therefore, the appellant not only claimed ownership of the Artificial/Imitation Jewellery but also provided G.D No.QDRY-HC-7821 dated 18.03.2021 and also release order vide No.7821 dated 18.03.2021, purportedly issued by Superintendent NLC, Dry Port Quetta in support of lawful purchase of Artificial/Imitation Jewellery to respondents. The appellant also submitted proof of legal import and subsequent sale of the seized Artificial/Imitation Jewellery. The respondents submitted parawise comments on reply to show- cause notice.
17. It is obvious that due process of search and seizure was not done in accordance with law-hence search on the basis of which whole case has been made out becomes illegal, void and without lawful authority. No notice under Sections 26 and 171 of the Customs Act, 1969 was served upon the claimants/owners by the seizing agency during and after the seizure of their consignment as it can be observed from the Show-Cause Notice dated 01.12.2021. The object of Section 26 of the Customs Act, 1969 was to empower the authority to ask for information or require the production of documents or inspect the same in order to determine the legality or illegality of importation or exportation of goods which had been imported or exported, the value of such goods, the nature, amount and sources of funds or the assets with which the goods were acquired and the Customs Duty chargeable thereon. Such information can only be called for from the claimant for the specific purpose of determining the legality of possession of impugned goods. Authorized officer of the customs could call upon any importer or exporter to furnish information in case where such determination was required. Such officer could not make a roving inquiry or issue a notice by merely shooting in the dark in the hope that it would enable him to find out some material out of these documents and then charge the party with irregularity or illegality. Customs Authority had to state and disclose in the notice the purpose for which party was required to produce those documents or supply information. Unless such purpose was specified in the notice, the addressee would be clueless about the demand being made through such a notice. Section 26 of the Customs Act, 1969 does not provide for making indiscriminate roving and fishing inquiry, irrespective of fact whether any determination of legality or illegality in import or export of funds with which goods were acquired was to be determined. Even in cases of suspicion of commission of illegality, details should be provided to the party to enable him to have an opportunity to produce all relevant documents and disclose information. Depending on facts and circumstances of a case, any notice without disclosing any fact or particulars for which information or documents were required would be in violation of principles of natural justice and could be struck down as illegal and without jurisdiction. Honorable High Court of Balochistan vide Customs Appeal No. 3 of 2003 observed as under: "Proceedings under Section 26 of the Customs Act, 1969 are to be drawn before adjudication as it gives powers to appropriate officer to call for information relating to goods as may be necessary for determining legality or illegality of importation of such goods. Confiscation of goods would be illegal when no such proceedings under section 26 were drawn by the customs department prior to the order of confiscation passed by the adjudication officer nor any such material was placed before him."
18. The principle of law that the state functionaries have no power and authority to conduct fishing and roving inquires without possessing any definite and proper information, just in hope to unravel some concealment and illegality on the part of the assesse / tax payer / citizen is very well settled.
In other words, before embarking upon any inquiry the state functionary must already possess some definite material so as to establish any illegal action having been taken by the citizen. In this regard reference is invited to 1995 PTD (Trib) 580. The issue came up for judicial scrutiny before the Supreme Court of Pakistan in the case of Assistant Director Intelligence and Investigation v. M/s. B.R. Herman PLD 1992 SC 485, wherein their lordships had observed that "The object of section 26 of the Customs Act, 1969 is to empower the authority to ask for information or require the production of documents or inspect the same in order to determine the legality or illegality of importation or exportation of goods which have been imported or exported, the value of such goods, the nature, amount and source of the finds or the assets with which goods were acquired and the customs duty chargeable therein or for deciding anything incidental thereto. The authority can only for specific purposes of determining the legality or illegality call for information as required by section 26. Even in cases of suspicion of commission of illegality, details should be provided to the party to enable him to have an opportunity to produce all the relevant documents and disclose information. Depending on the facts and circumstances of the case, any notice without disclosing any fact or particulars for which information or documents are required will be 'in violation of the principles of natural justice and may be struck down as illegal and without jurisdiction." It is imperative to place on record that equity is the soul of the law in dispensation of justice in the instant matter. The Appellants have furnished the substantial evidences, that is the relevant Goods Declaration cleared from the Model Customs Collectorate of Appraisement, Quetta vide G.D. No. No.QDRY-HC-7821 dated 18.03.2021 which led to the facts that the goods were out of customs charged as per law. The Honourable Supreme Court of Pakistan in a hallmark judgment namely Imtiaz v. Ghulam Ali reported as PLD 1963 SC 382 laid down the rule that the proper purpose of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All the technicalities have to be avoided unless it be essential to comply with them on ground of public policy. Any system which by giving effect to the form not to the substance defeats substantive rights is defective to the extent. The ideal must always be a system that gives to every person what is his right under the law. The contention of the parties regarding Sections 2(s) and 16 of the Customs Act, 1969 is not applicable to the Appellants, because Appellants had legally/lawfully provided the iota of evidence in proof of their claim thereof. Since the goods in question were seized within the territory of the city and not the border or sea-coast or any other suspicious place, therefore bringing in of such goods through unauthorized route cannot be established and as such it is not liable to confiscation as per settled law vide SCMR 1995 Pages 387, 389 and 407, wherein the Honourable Apex Court of the country reported in SCMR 1995 has ruled that " if the item alleged to be smuggled by the prosecution was freely available in the open market and import of such goods were not banned in the country, presumption could arise that the goods in question were lawfully brought in the country unless contrary was shown" confiscation of seized goods unjustified as the same are freely available in the local market.
Furthermore, the seized goods do not fall under Section 2 (s) of the Customs Act, 1969 and there is nothing on record to show that documents produced are fake or non-genuine. The learned counsel of the appellant therefore, claims that the charges leveled against the appellant be declared not established and has also prayed for release of the seized goods lawfully imported and legally acquired Artificial/Imitation Jewellery (15110-kis) of the Appellant and also made a plea for remitting. 20% redemption fine and personal penalty of Rs. 100,000/- imposed upon the appellant Muhammad Ismail son of Abdul Kabeer Possession holder /driver of Truck No. SPN-146 in two also may plea for reemitting 20% redemption fine and personal penalty of Rs.25,000/- upon container.
19. It is important to mention that the application of Sections 2(s) and 16 of the Customs Act in the subject case by the seizing authority is misconceived since these goods are not part of the prohibitory/restricted list of items in terms of Section 2(s) of the Customs Act, 1969 and were brought into the country by a route declared under Section 9 or 10 ibid. Before proceeding further let us review the relevant Sections 2(s) and 16 and clauses (8), (89) and (90) of Section 156(1) of the Customs Act, 1969. It will be convenient to start by gathering in one place the relevant provisions of the Customs Act. The provisions are as follows: "2 .......... (s) "smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force or evading payment of customs-duties or taxes leviable thereon,-
(i) 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 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 includes an attempt. abetment or connivance of so bringing in or taking out of such goods and all cognate words and expressions be construed accordingly..."
"187. Burden of proof as to lawful authority etc.- When any person is alleged to have committed 'an offence under this Act and any/ question arises whether he did any act or was in possession of anything' with lawful authority or under a permit, license or other document prescribed by or under any law for the time being in force, the burden of proving that he had such authority, permit, license or other document shall lie on him."
20. The crucial point of difference among the three clauses: clause (8) applies to the smuggling of goods, clause (89) to "smuggled goods" and clause (90) to goods" not being goods referred to in clause (89)". The distinction between the "smuggling of goods" and "smuggled goods" is clear.
21. The above discussion persuades us to observe that if a person has been found without lawful excuse in possession of smuggled goods etc. he would be dealt with under clause (89) of section 156 of the Customs Act and if the evidence produced by the prosecution establishes that accused was smuggling the goods outside or into Pakistan, then he would be liable to be dealt with under clause (8) of Section 156 of the Customs Act, 1969 and in such circumstances, would not be punished, under clause (89) of Section 156 of Customs Act. Thus, clause (8) applies in relation to the very act (or acts together) which constitute the offence of smuggling. As Section 2(s) makes clear, this would include an attempt to smuggle and/or an abetment or connivance thereof.
Clause
(89) on the other hand applies to, or at, the stage when the offence of smuggling is already complete. The difference can also be understood by noting that in clause (8), the word "smuggled" is used as a verb, whereas in clause (89), it is used in a descriptive sense as part of the expression "smuggled goods" (i.e., as an adjectival participle or verbal adjective to indicate a past or completed action). When the facts and circumstances of the present case are perused, it is clear that clause (8) had no application at all. The act or offence of smuggling if so proved (even if such had occurred) longtime ago. One reason why it is important to establish whether or not the good are "smuggled goods" (i.e., whether or not section 2(s) applies is that this determines whether it is clause (89) or that is to apply. Clause (89) applies to smuggled goods, and clause (90) applies to those goods to which the former does not apply, i.e., those which are not smuggled goods. It necessarily follows from this that clauses (89) and (90) cannot simultaneously, be held to apply to the facts and circumstances of a particular case. Either the goods involved are smuggled goods, or they are not. A determination on order that concludes that both clauses apply, or purports to hold a person liable in terms of both, is bad in law and cannot be sustained. Furthermore, when clause
(89) is examined, it is seen that it applies to "smuggled goods" in two distinct situations. Firstly, it applies when it has been determined that the goods are indeed smuggled goods. But, secondly, it also applies when there is a "reasonable suspicion" that the goods arc smuggled goods. This obviously sets or requires a lower threshold, but it is important to note that the focus must still be on the goods being smuggled goods. Thus, when clauses (89) and (90) are considered together, three situation emerge: (a) the goods can be smuggled goods; or (b) there may be a reasonable suspicion that the goods are smuggled goods; or (c) the goods are those to which neither (a) nor
(b) apply. The first two contingencies come within clause (89) and the third within clause (90). In our view therefore, for a lawful determination to be made when a question arises in relation to any goods as to whether customs duty and other taxes leviable thereon have been evaded or that such goods have been brought into Pakistan in breach of any prohibition or restriction, it must be carefully considered whether (i) the goods arc smuggled goods, or (ii) are those in respect of which there can be 'a reasonable suspicion that they are smuggled goods. For this purpose, the definition of smuggling in Section 2(s) must be carefully considered in order to determine whether it applies in the facts and circumstances of the particular case. If the answer is in the affirmative then (and only then) clause (89) applies. If not, then it is only clause (90) that can apply. The onus of such determination lies on the customs authorities. The appropriate officer exercising jurisdiction under the Customs Act must properly apply his mind to the facts of the case and consider the statutory provisions in the manner explained above, but on the contrary in this case such important statutory restrictions have been given short shrift by the customs authorities at the seizure stage and by the adjudication officer at the time of passing the order against the appellants on the basis of arbitrary allegation of Indian origin, such is nor alleged / mentioned in seizure and neither in Show-Cause Notice. It is beyond and out of the scope of the Show-Cause Notice.
22. We have considered the contentions of the appellants as well as of the respondents. The relevant documents submitted and placed on record have been perused. The learned counsel for the appellant has reasonably discharged burden of proof under section 187 through submitting lawful import documents i.e. G.Ds, No. No.QDRY-HC-7821 dated 18.03.2021 and release order vide No. 7821 dated 18.03.2021 of the import consignment confiscated Artificial/Imitation Jewellery. The appellant has amply discharged the burden of proof in respect of the goods seized from the during transportation of container form Quetta to Karachi by the seizing agency that these were lawfully import. What has been stated, discussed and observed herein above particularly the ratio decidendi in the judgments of Superior Courts along with the additional observations made thereon, we hold the impugned orders passed during the hierarchy of the customs suffer from grave infirmity and thus are declared to be illegal. The impugned Order-in-Original No. 44/2022 dated 21.02.2022 is accordingly set aside having been issued without taking into consideration the fact that the impugned goods were legally acquired by the appellants on which leviable duty and taxes were duly paid at the time of import. The Respondents are directed to release the seized goods mentioned in the Show-Cause Notice dated 01.12.2021 namely, foreign origin Artificial/Imitation Jewellery Qty 15110-Kgs so no mens rea for smuggling can be attributed to the driver/owner of the vehicle. Keeping in view the dictum of the honorable apex Court in case Haji Abdul Razzak v. The State" reported as "PLD 1974 Supreme Court (sic) we have noted that outright confiscation of conveyance/vehicle which is usually used for transportation of goods in the normal course is uncalled for and too harsh. The honorable Supreme Court in the above referred case held that the persons sought to be deprived, of the property must be given notice to show-cause, they must be furnished with adequate opportunity of putting forward their point of view and the same must receive due consideration. Furthermore no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed. No innocent person should be unjustly punished or deprived of his property.
23. What has been stated, discussed and observed herein above particularly the ratio decidendi in the judgments of Superior Courts along with the additional observations made thereon, we hold the impugned orders passed during the hierarchy of the customs suffer from grave infirmity and thus are declared to be illegal. The impugned Order-in-Original No.44/2022 dated 21.02.2022 is accordingly set aside having been issued without taking into consideration the fact that the impugned goods were legally acquired by the appellants on which leviable duty and taxes were duly paid at the time of import. The Respondents are also directed to release the seized goods as mentioned in the Show-Cause Notice dated 01.12.2021 namely foreign origin legally acquired Artificial/Imitation Jewellery Qty 15110-Kgs to the appellant unconditionally forthwith. The seized Hino Truck Trailer bearing Registration No.SPN-146 along with container is also hereby ordered to be released unconditionally to their lawful owners.
24. Appeals are accordingly allowed with no order as to cost.