ABDUL JABBAR QURESHI, MEMBER JUDICIAL-J. By this judgment, I intend to dispose of Customs Appeal No.H-1652/2022 filed against Order-in-Appeal No.1998/2022 dated 10.06.2022 passed by the learned Collector of Customs (Appeals), Karachi read with Order-in-Original No. 106/2022 dated 18.01.2022 passed by the learned Deputy Collector of Customs (Adjudication), Quetta. Camp at Hyderabad.
2. Brief facts are that on 14.10.2021, the Directorate of Intelligence and Investigation-Customs, Regional Office, Hyderabad team intercepted a truck/trailer at National Highway near Hatri Bypass, Hyderabad which was coming from Karachi. On checking, 80 bags of foreign origin "Whey Powder" were found in the trailer/container along with other local origin goods. The driver of the vehicle namely Muhammad Mudassar Son of Muhammad Ashraf produced two transportation billies Nos.6018/40 and 6020/40 both dated 12.10.2021 issued by M/s. Lucky Choudhry Goods Transport Company, Karachi. The driver also produced a G.D dated 23.03.2021 in support of "Whey Powder", which was found irrelevant. On examination of the bags of Whey Powder, it was found that the Iranian Milk Powder was packed in the bags of Whey Powder on the spot. Since the information was authentic, therefore, the 80 bags of Iranian Milk Powder were unloaded from the conveyance and detained to ascertain its legal importation into the country. However, subject trailer/container was allowed for its further destination along with other local origin goods. Mushernama was prepared on the spot duly signed by the Musheers and detained milk powder was shifted to the office of the seizing agency for further legal process. No one appeared in this office for claiming the ownership nor produced further legal import documents in support of detained milk powder till issuance of the notice under Section 171 of the Customs Act, 1969. It is crystal clear that the recovered Iranian Milk Powder is smuggled one and brought into the country through unauthorized routes without payment of legitimate duty and taxes leviable thereon and being transported under the garb of fake/bogus import documents to hoodwink the Customs Authorities. Therefore, the subject goods were seized under Section 168 of the Customs Act, 1969 for violation of the provisions of Sections 2(s) and 16 of the Customs Act, 1969, read with Section 3(1) of the Imports and Exports (Control) Act, 1950 and Sections 3 and 6 of Sales Tax Act, 1990 punishable under clauses (8) and (89) of Section 156(1) of the Customs Act, 1969. Notice under Section 171 of the Customs Act, 1969 was issued against the driver of the vehicle and a copy of the same was pasted on the Notice Board, office of the Directorate of Intelligence and Investigation (Customs), Regional Office Hyderabad. The details of seized goods are as under:- Description and QuantityCustoms Assessed ValueDuty and Taxes Involved
1. Iranian Skim Milk Powder Branded Khazra, Pro Date = 6.9.2021 Expiry Dated =6.9.2023 Quantity 40-Bags, each bag of 25-Kgs Total=1,000/- KgsRs.322,709/- Rs.318,888/-
2. F/o Milk Powder Expiry and mentioned Quantity 40- Bags, each bag of 25 Kgs Total=1,000-Kgs.Rs.374,701/- Rs.370,264/- Total Rs.697,409/- Rs.689,152/-
3. Show-Cause Notice dated 11.12.2021 was issued and matter was adjudicated by the learned Deputy Collector of Customs (Adjudication, Quetta Camp Office at Hyderabad, who has passed an Order-in-Original 106/2022 dated 18.01.2022 where in seized goods were confiscated out right hence, adjudicating proceedings culminated into passing of Order-in-Appeal No.1998/2022 dated 10.06.2022 by the learned Collector of Customs (Appeals), Karachi is under:- "From the record of the case, I observe that the appeal is time barred by about eight (08) days: the impugned order was passed on 18.01.2022 and the appeal against the aforesaid order was required to be filed by 17.02.2022 (i.e. within 30 days) in terms of the time limit stipulated under section 193 of the Customs Act, 1969 whereas the same was filed on 25.02.2022. Thus, the appeal is time barred by 08 days. No cogent reasons have been given by the applicants to explain the delay in filing the appeal within the prescribed time period neither any written request for condonation of delay in filing of appeal has been filed. Under these circumstances, I have no reason to condone the inordinate delay in filing the appeal. Therefore, the case is accordingly rejected as time barred."
4. Appellant again aggrieved filed the instant appeal before this tribunal on grounds are as under: a. That the appellant is bona tide purchaser and owner of above mentioned seized goods i.e. Skimmed Milk Powder of different types and brands as mentioned in the subject show-cause notice. b. That no notice under sections 26, 165 and 171 of the Customs Act, 1969 was served upon the applicant/claimant of the subject goods. This is in sheer violation to the judgments of the Hon'ble Supreme Court of Pakistan and also superior courts including Hon'ble Customs Appellant Tribunal. c. That the appellant purchased the goods from the open market in Karachi being freely available in the open market. The appellant was not provided with the relevant import documents of the above mentioned seized goods. d. That the appellant being a law abiding citizen wants to pay duty and taxes in order to get the goods released since the goods are perishable in nature and could not be stored for longer period of time. e. That the seized goods are not prohibited/banned goods, these are freely available in the open market considering the said principle enunciated by the Hon'ble Apex Court in its reported judgment 1995 SCMR Page 387 where it was held that the charge of smuggling could not be levelled in respect of goods which are freely available in the open market and the import of such goods was not banned in the country. The reliance of the same was made by the Hon'ble Customs Appellate Tribunal while disposing of the Customs Appeal No.339/200(sic) Mr. Muhammad Hanif v. The State, 301/2003 Naseer Ahmed v. Collector of Customs, Sales Tax and Excise, Quetta and 2014 PTD (Trib.) 1566. f. That the seized goods (Skimmed Milk Powder) were neither seized within the five miles of the Indian or Iranian Border nor have been brought into the country via route other than one declared or from a place other than a "Custom Station" rather was intercepted at National Highway near Hatri Bypass, Hyderabad which was coming from Karachi. The goods seized are far away from the border and freely available in the open market which cannot be out rightly confiscated owing to the principles laid down by Customs Appellate Tribunal in its judgment cited as 2005 PTD (Trib.)
1139 and 2014 PTD (Trib) 1566. g. That even otherwise it is a settled principle of law as decided in many of the judgments of the superior courts, that the goods available in the open market are considered to be brought into the country after payment of customs duty and taxes. Even then the option to pay duty to get the seized goods released by given under section 81 of Customs Act, 1969. h. That even if it is assumed that the goods were smuggled through illegal means and route adjudicating authority has vested powers under section 181 of the Customs Act, 1969 to order to release the goods on payment of duty and taxes along with redemption fine, the dictum has been laid down by the Hon'ble Supreme Court of Pakistan in matter of Collector of Customs Peshawar v.
Wali Khan cited as 2017 SCMR 585 Supreme Court. i. That an option to pay the duty and taxes with redemption fine under section 181 of the Customs.
Act, 1969 is the statutory right of the appellant under the principles laid down by the Superior Courts. While deciding the similar matter it was held by the Hon'ble Peshawar High Court in a judgment cited as 2015 PTD 1733 has opined in the following manner:- "(iii) Any smuggled goods as provided under section 2(s)of Act could be released on payment of redemption fine under section 181 of the Act unless Federal Government expressly notifies under the first proviso of section 181 of the Act.
(iv) the concerned officer in absence of any compelling reason, must not without the exercise of discretion of giving an option to the owner of goods under said section for redemption of goods in lieu of payment of fine, except in the cases in which goods cannot be allowed to be circulated in the market or the goods which were imported in violation of section 15 or of the notification issued under section 16 of the Customs Act, 1969." j. That the seized Skimmed Milk Powder are owned by the applicant/claimant which were purchased by him in the open market at Karachi from a whole seller who is importer of such commodities as well, on his assurance that the duty/taxes on the goods have already been paid at the time of its import into the country and in support of his contention, he provided him the photocopy of import G.D. k. That since the Skimmed Milk Powder are not included in the list of banned items specified in Appendix-A in terms of Para-5(A)(i) of import policy order in vogue and is freely traded commodity which are abundantly available throughout the country without any restriction, therefore, the appellant did not hesitate to purchase the same for supply thereof to his customers. l. That the trading of skimmed milk powder, its availability and utilization in abundance by the general public is even not restricted under the law of the land. Had there been intention of the Government to restrict their transaction within the country, it might have included these commodities in negative list and have enacted legislation to impose restrictions on their use as well. m. That the skimmed milk powder is neither notified item in terms of section 2(s) of the Customs Act, 1969 as alleged by the seizing agency nor its import is prohibited vide. Import Policy Order enforced and it is freely traded commodity, hence its seizure from a settled area right in the middle of the country and subsequently detention and seizure by the seizing agency is unwarranted and unjustified. n. That the seizure of freely traded skimmed milk powder from the settled area of the country and subsequently its outright detention is in conflict with the observation by the Hon'ble Supreme Court of Pakistan vide its judgment reported as 1995 SCM R 387 wherein it was held by the division bench of Apex Court that:- "if the items alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". o. That the Customs Appellate Tribunal Karachi while relying upon the dictum laid down by the Apex Court vide its judgment in Customs Appeal No.339/2000 titled "Muhammad Hanif v. State" and in Customs Appeal No.301/2003 titled "Naseer Ahmad v. Collector of Customs, Sales Tax and Excise Quetta" held that "to produce legal import documents is nothing but to put undue pressure on the business community inspite of the fact that it has been observed number of times by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid". p. That the appellant purchased this freely traded commodity from the open market at Karachi, However, no sales tax invoice or any incriminating evidential documentation for its lawful transaction were available with him, therefore he surrendered himself at the mercy of adjudicating authority and has opted to pay duty/taxes on the seized goods if already not paid. q. That the Customs Appellate Tribunal Lahore while relying upon the ratio laid down by the Hon'ble Lahore High Court Lahore in case reported as PLD-2017-Lahore-830 has categorically rebutting the stances of the department as regard to applicability of SRO No.566(1)/ 2005 dated 06-06-2005 has allowed release of the seized goods vide judgment dated 04-05-2021 in Custom Appeal No.519/LB/2020 titled "Wali Muhammad v. Collector of Customs Multan" on payment of 20% redemption fine as well as leviable duty/taxes subject to the fulfillment of requirements as imposed vide import policy order enforced. The relevant portion of the judgment is reproduced hereunder:- "regarding the applicability of S.R.O. No.566(l)/2005 dated 06-06-2005, it may be appreciated that when a list is given "species" having traits are clubbed to be hauled together in consonance with application of interpretation canon of "ejudem generis" which means that the word used in a specific context are to be followed by the word of the same 'genus' or 'genes'.
As held by the Hon'ble Lahore High Court Lahore in case "Pakistan College of Law v. University of the Punjab and others PLD 2017 Lahore 830 that the principle postulates that "when drafter has tacked a catchall phrase at the end of an enumeration of species as in "dogs" cats, horses and other animals" we are to read "other animals" as "other similar animals". It implies addition of the word "similar" after the word "other". The ratio of the said dictum leads to interpret that the said expression at the Serial No.15 of the table of SRO "food grains and food items, all sorts" shall imply "similar food items..." and not those things under the sun which could be edible. This view is further strengthened by the fact that in the said SRO, the Serial No.11 reads as "Edible oil, all sorts, including hydrogenated vegetable oil" and Sr. No.43 reads as "vegetable ghee" and cooking oil are edible items". Accordingly it is viewed that all food items cannot be clubbed under the said Serial number. r. That the Special Bench of Customs Appellate Tribunal Lahore vide its latest judgment dated 07.07.2021 in Customs Appeals No.316/LB and No.317/LB while modifying the order of the adjudicating authority appealed against for outright confiscation of skimmed milk/whey powder has given option to the owners of the goods to get release of the confiscated consignment on payment of leviable duty/taxes plus redemption fine @ 20% of the value. s. That the judgments passed by the Customs Appellate Tribunal Lahore have attained the finality, as the judgment by the tribunal has been complied with in later and spirit and no reference against these observations by the department has been filed before the Hon'ble High Court. t. That the detention/seizure of skimmed milk powder is not only damaging the repute of the applicant/Claimant but also causing hardship on account of blockage of considerable amount on detained/seized goods in question. It is further added that since skimmed milk powder is a perishable commodity and there are likely chances of debilitation of its quality due to improper storage and climatic effects for indefinite period, therefore early decision of the subject case is solicited by the learned adjudicating authority, so as to save him from further irreparable financial losses and economic implications. u. That there is nothing on the record to show that the route used by the appellant was a route other than notified, vide sections 9 and 10 of the Customs Act, 1969, and that National Highway near Hatri Bypass Hyderabad has been mentioned as a none notified or unauthorized route as no trade of transportation of the goods from the point that the goods alleged to have been brought into Pakistan through none notified route to avoid Custom duties and taxes have been recorded in the seizer report as well as in the subject show-cause notice. v. That the seizing agency is unable to substantiate with any supporting documents to prove the act of smuggling within the meaning of section 2(s) of transporting goods unlawfully into Pakistan in violation of the Customs Act, 1969. w. Admittedly, the import of subject goods is not restricted or prohibited under the Customs Act, 1969 and are freely available in the local market within Pakistan and in view of judgment of Hon'ble Supreme Court of Pakistan in case titled as "Sikandar A Karim v. The State (1995 SCMR 387), presumption of lawful importation of such goods is attached to it. Relevant observation is reproduced as under:-.
"If the items alleged to smuggled by the prosecution were available freely in the open market and imports of such goods was not banned in the country a presumption may arise that these goods were lawfully brought in the country unless contrary is shown" x That in another judgment of the Hon'ble Supreme Court passed in case titled as The Assistant Collector, Central Exercise and Land v. Qazi Zia Ud Din (PLD 1962 SC 440), wherein it has been held that.
"If a person purchases goods in an ordinary market then in the absence of any suspicious circumstances or some definite facts leading to that inference the customs officer is not entitled to a reasonable belief that the Government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside into Pakistan is that they come through the Customs barrier and the duty payable is in fact paid. The presumption, therefore, with respect to any goods which may be sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them."
Y. That it has been also alleged by the seizing agency that the applicant/claimant have failed to produce the import documents in respect of the seized goods. In this regard it is categorically stated that since, the applicant/claimant are not the importers but are local traders who have purchased the subject imported goods which are freely available in the local market, therefore, it was not possible for him to produce any import documents to the seizing agency. The insistence to produce such import documents is nothing but undue pressure of the seizing agency on the applicant/claimant, which act is arbitrary and unjustified. Since, the seizing agency failed to discharge its onus to prove through evidence, the trail of transportation of the subject goods from entering into Pakistan through un-notified routes, under sections 9 and 10 of the Customs Act, 1969, without payment of custom duties and taxes, the subject goods in question namely skimmed milk power therefore, cannot be categorized as smuggled goods within the meaning of section 2(s) of the Customs Act, 1969.
5. Cross objections were filed on behalf of the department which are taken on record. During the course of hearing the learned DR respectfully prayed that Honourable Customs Appellate Tribunal may graciously be pleased to declare that admittedly impugned Skimmed Milk Powder of Iranian origin was smuggled and the appellant has failed to discharge burden of proof of lawful possession by way of furnishing legal import documents. Therefore, the Skimmed Milk Powder has been ordered outright confiscation vide Order No. 106 of 2022, dated 18.01.2022, subsequently maintained vide Order-in-Appeal No. 1998/2022 dated 10.06.2022, passed by the Collector of Customs (Appeals), Karachi (Respondent No. 1) No interference is required. The Customs Appeal No. H-1652 of 2022, being devoid of law, without any substance is not maintainable, therefore, may graciously be dismissed in limine.
6. Perused the case record and heard the both parties. Full account of the case leading, to filing of instant appeal before this tribunal has been reproduced in the foregoing part of the instant order.
7. Briefly stated, the staff of Directorate of Intelligence and Investigation-Customs, Regional Office, Hyderabad recovered 80 bags of Skimmed Milk Powder found in the trailer/container along with other local origin goods which was later seized on the grounds that it was smuggled into the country without payment of leviable duty and taxes. The case was decided against the present appellant at the initial stage. Later on the same decision was upheld by the Collector (Appeals) on the grounds that seized skimmed milk was brought into the country through unauthorized routes without payment of leviable duty and taxes. The appeal filed by the appellant before this tribunal against the order of learned Collector of Customs (Appeals), Karachi read with impugned Order- in-Original No.106/2022 dated 18.01.2022.. On the other hand, the advocate of the appellant simply prayed that Skimmed Milk being freely importable may be released on payment of leviable duty and taxes along with 20% redemption fine of the ascertained value of goods under section 181 of the Customs Act, 1969 in addition to payment of leviable duty and taxes.
8. I feel that the definition of Adjudicating Authority under section 2(a) of the Customs Act, 1969 is obviously confined to Customs Officer who are covered under section 3 of Customs Act, 1969 and the Members of Customs Appellate Tribunal are not covered under definition of section 2(a) of the Customs Act, 1969. Whereas the SRO 499(1)/2009 dated 13.06.2009 which specifies the redemption fine regime is for guidance and operation by the Customs officer only but the Customs Appellate Tribunal or any judicial fora above is not bound by the dictates of the SRO 499(l)/2009. This fact is further fortified, if the scheme of Customs Act is carefully examined. It is obvious that customs officer empowered to adjudicate under section 179 and they issue show-cause notice under section 180 of the Customs Act, 1969. In continuation the section 181 of the Customs Act, 1969 empower the officers who had adjudicated the case to redeem the confiscated goods against redemption fine. All these sections describe the legal activities by the adjudication officers, however, section 2(a) of the Customs Act, 1969 specifically indicate that Customs Appellate Tribunal is not covered under the expression "Adjudicating Authority" as follows: "(a) "adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not the Board, the Collector (Appeals) or the Appellate Tribunal"
Therefore we hold that Customs Appellate Tribunal not being "Adjudication Authority" under section 2(a) of the Act are not bound by the dictates of SRO 499(1)/2009 which "directs" the Customs adjudicating authorities to keep in view the pitch of fine depicted therein. Therefore for question (iv) above we feel Customs Appellate Tribunal has to decide the cases on their merits and those goods which were confiscated out rightly by the Adjudication officer under SRO 499(1)12009 dated 13.06.2009 could be released against suitable redemption fine if deemed appropriate by the judicial fora above the customs hierarchy. Thus, Customs Appellate Tribunal is not bound by SRO 499(1)/2009.
9 It is pertinent to mention that SRO 566(1)/2005 dated 06.06.2005 does not depict the expression "Skimmed Milk" at an serial number thereof. That at S. No. 2 of Appendix-N of Import Policy Order, 2020 the expression, "Milk Power" appears which covers "Skimmed Milk" which usually contains low fat. The Milk Powder is classified under PCT 0402.2100 whereas the Skimmed Milk attracts PCT 0402.1000 in Pakistan Customs Tariff. Similarly, the Skimmed Milk is also no covered under S. No. 15 of SRO-566(I)/2005 under the expression "food items all sorts". The details reasons regarding non coverage of Skimmed Milk" under expression "food item all sorts" were given by learned Customs Appellate Tribunal Bench (II), Lahore CA No. 519/LB/2020 and Customs Appellate Tribunal (Special Bench), Lahore C.A. No. 316/KB/2021 and C.A. No.317/2021. I have benefitted for the detailed judgment in the above mentioned customs appeal and respectfully agree to the reasoning given there under
10. It was observed that since the locally purchased alleged goods which are freely available in open markets. Nor the same found being transported to the border area or coastal sides. Hence, the provision of Section 2(s) of the Act, 1969 is not invokable which is criminal in nature requires higher standard of proof or evidence instead of departmental presumption. The alleged goods were detained and seized by the Department at national highway within load limits of Hyderabad which is far beyond the border area, therefore, such locally purchased alleged goods being transported from Karachi onwards through duly registered carrier could not be treated as offence of smuggling as defined under section 2(s) of the Act, 1969. The Appellant discharged initial burden regarding lawful possession of alleged goods in terms of Section 187 of the Act, 1969 by producing proper receipt of purchase of alleged goods from local market of Karachi being document of title of goods prescribed under section 2(4) of the Sales of Goods Act, 1930 which was discarded without required verification to ascertain whether the same were locally purchased or not, hence, it should have been presumed by the Adjudicating Authority under Article 129 of Qanun-e-Shahadat Order, 1984 as per illustration (g) that had Department verified the same, the result would be different. Tribunal has passed order on 17.02.2010 in similar a case thus the appellant entitle for equal treatment under the doctrine of equal protection of law and rule of consistency envisage under Article 25 of the Constitution of Pakistan, 1973.
11. The Sections 2(s) and 16 of the Act, 1969 does not attracts under the facts and circumstances of the instant case as the Department, while seizing and confiscating the alleged goods acted in violation of express provisions of the Customs Act, 1969 who neither associated any independent witness in this case at the time of preparing musheernama of recovery as per requirement of Section 103, Cr.P.C., nor it was established through any material evidence or report of a competent Authority which could establish that the alleged goods are smuggled / non duty paid where in reliance was made on judgment of Honorable Supreme Court of Pakistan cited in PLD 1962 SC 440.
12. It also apparent that the department failed to discharge its burden to prove the smuggling as alleged. Neither purchase receipts of alleged goods were verified nor the same was controverted. It should have been presumed by the adjudicating authority under Article 129 of the Qanun-e- Shahadat Order, 1984 as per illustration (g) had the Department verified the same the results would have been different in favor of the Appellant. Suspicious circumstances or some definite facts leading to reasonable belief that alleged goods were of smuggled goods and non-duty paid are also missing in the case record. The presumption, therefore, with respect to such goods which may be sold in the open market in the absence of any indication to the country would be that duty or taxes have been paid on the them as held by the Honouable Supreme Court in its judgment cited PLD 1962 SC 440 relied upon by the Appellant. It is settled law that orders based on no evidence are nullity in the eyes of law in as done this case, the impugned order is observed to be not based on any adverse material or evidence which could establish the criminal charge of smuggling or having possession of alleged smuggled goods.
13. It is also important to note that the alleged goods were admittedly intercepted within the local limits of Hyderabad and the place of seizure is not notified as border area. Section 177 of the Customs Act, 1969 and SRO 118(1)/1983 dated 02-02-1983 has notified the area 5 miles adjacent to the frontier of Pakistan with India and Iran to be the area within the provision of Section 177 of the Customs Act, 1969 shall apply. The facts and circumstances of the case doesn't disclose any such suspicious circumstances which could establish allegation of criminal offence of smuggling as defined under section 2(s) of the Customs Mt, 1969 against the Appellant instead local trade transaction of purchases of alleged goods which are freely available in the local markets. I found that case of the Department is based on mere presumptions that alleged goods were smuggled which is not permissible in law and the same is in violative of Section 168 of the Customs Act, 1969 as per dicta laid down by the Honorable High Court of Sindh, Karachi in its un-reported judgment dated 14.01.2021 passed in similar case of [Collector of Customs v. Pir Muhammad and another] relied upon by the Appellant.-
14. In view of the above findings and by following dicta laid down by the Apex Courts in their cited Judgments. I observed that Department could not able to establish its case against the appellant.
The order of outright confiscation of locally purchased goods is not justified and sustainable in law which is without lawful authority. Consequently this appeal is allowed and the impugned Order-in- Appeal No.1998/2022 dated 10-06-2022 passed by leaned Collector of Customs (Appeals), Karachi read with impugned Order-in-Original No. 106/2022, dated 18.01.2022 passed by leaned Adjudicating Authority is modified to the extent that subject goods be released on payment of leviable duty and taxes along with payment of 20% redemption fine of ascertained value of impugned Skimmed Milk Powder.
15. Judgment passed and announced accordingly.
This order consists of (11) pages and each page bears my initials and office seal.