1. This appeal has been filed against the Order-in-Original No. 2/94 passed by the Collector of Customs, Lahore.
2. Brief facts of the case are that in August, 1989 the FIA Lahore had registered a case in connection with the smuggling of gold under FIR No. 13/89 dated 11.8.1989 against many persons including Muhammad Shahid and Saleem Ahmad Zia. During investigation of the said case, these two persons namely Muhammad Shahid and Saleem Ahmad Zia disclosed that their other companions were staying in Shabistan Hotel near Railway Station, Lahore and they were to smuggle foreign currency to India. A team of the FIA, therefore, conducted a raid at Shabistan Hotel and arrested two persons namely Muhammad Anwar and Abdul Qadir and recovered DM 17000 and Saudi Riyal 26000 from their possession. A separate case was registered by the FIA against them under FIR No. 14/89 dated 12.8.1989 and the foreign currency so recovered was seized.
3. Further investigation conducted by the seizing agency revealed that the foreign currency had been smuggled into Pakistan and it was to be further smuggled into India in violation of sections 2(s) and I6 of the Customs Act, 1969 read with section 8 of the Foreign Exchange Regulation Act, 1947 and section 3(1)(2) of the Imports and Exports (Control) Act, 1950 for which the accused persons were liable to punitive action under clause 89 of section 156(1) and section 178 of the Customs Act, 1969.
4. The case was adjudicated by the Deputy Collector of Customs Lahore vide his order in original No. 12/92 dated 14.4.1992 whereby it was held that the said currency was brought into Pakistan lawfully as per currency declaration forms of M/s. Muhammad Anwar and Abdul Qadir which indicated declaration of foreign currency before Customs' at Karachi Airport on 17.7.1989 and 1.8.1989 respectively. This was further substantiated by the PIA tickets indicating that the respondents had travelled from Dubai to Karachi on these dates. The adjudicating officer accordingly vacated the show cause notice on the grounds that the foreign currency was in lawful possession of the respondents at the time of seizure.
5. Subsequent to the issuance of the aforesaid Order-in- Original, it came to the notice of the Collector of Customs, Lahore, that the true facts were not brought before the Deputy Collector of Customs and the documents produced, before him were found fake on subsequent investigation.
The investigation revealed that the currency declaration form No. 479/E/89/II dated 31.7.1989 in the name of Muhammad Anwar son of Usman Qamar and FM No.. 476/C/89/II dated 1.8.1989, in the name of Abdul Qadir son of Muhammad Hashin were fake/bogus. The currency declaration register maintained by Karachi Customs Staff at Qaid-e-Azam International Airport for the month of July and August 1989 showed that the FM forms bearing No. 476/C/89/II and 479/B/89/II had not been entered therein and that these forms were also not signed by the passengers namely Abdul Qadir and Muhammad Anwar which established that the above said forms were bogus and not genuine.
6. Therefore, in exercise of the powers vested under section 195 of the Customs Act, 1969, the case was re-opend by the Collector and M/s. Muhammad Anwar and Abdul Qadir were called upon to show cause vide C. No. V-14(228)/89/597 dated 5.7.1993 as to why the foreign currency released by the Deputy Collector vide his aforementioned Order-in-Original be not confiscated besides imposition of personal penalty for violation of the provisions of the Customs Act, 1969.
7. The appellants in the meanwhile, moved the Lahore High Court by invoking writ jurisdiction. The Honourable Lahore High Court called and directed the Collector of Customs, Lahore on 12.10.1993 to hear the appellants and the FIA authorities on 14.10.1993 and decide the case on merits by 16.10.1993 without fail. The Learned Collector of Customs, Lahore, after hearing both the parties held vide his Order-in-Original No. 21/93 dated 14.10.1993 that the Order-in-Original No. 12/92 dated 14.4.1992 passed by the Deputy Collector of Customs, Lahore, was devoid of legality and propriety. He, therefore, ordered confiscation of the foreign currency in question under the relevant provisions of the Customs Act, 1969 and also imposed personal penalty of Rs. 25,000 each on Mr. Muhammad Anwar and Mr. Abdul Qadir.
8. The appellants went in appeal against the aforesaid orders and simultaneously filed a Writ Petition before the Lahore High Court against FIA authorities under the contempt of Court Act, 1976.
The Honourable Lahore High Court while disposing of this Writ Petition directed the Collector of Customs, Lahore, to decide the case afresh after taking into consideration the rulings of the superior courts quoted by the learned counsel for the appellants.
9. In compliance with the aforesaid direction of the Lahore High Court, the learned Collector of Customs, Lahore, again heard the case and came to the following conclusions.
(i) The case was rightly re-opened under the provisions of Section 25 of the Customs Act, 1969.* No illegality had been committed by the FIA in respect of search and seizure.
The subject currency was not brought into Pakistan in a lawful manner.
(iv) The allegation that the FIA authorities had demanded illegal gratification of Rs. 50,000 from the appellants was not proved.
10. In view of the above, the learned Collector of Customs, Lahore, one again held that the order dated 14.4.1992 earlier passed by the Deputy Collector of Customs, Lahore, lacked propriety and legality. The foreign currency in question was, therefore, ordered to be confiscated to the State under the provisions of Section 156(1) clause 89 and section 178 of the Customs Act, 1969 and personal penalty of Rs. 25,000 was also imposed on each of them i.e. Mr. Muhammad Anwar and Mr. Abdul Qadir.
11. The aforesaid orders have been challenged by the appellants maintaining that:-
(i) The proceedings conducted in respect of this case are non-existent in the eye of law because the search as such was conducted in clear violation of the mandatory provisions of law contained in Section 162 and 163 of the Customs Act, 1969. The same becomes infructuous on another count as well i.e., in terms of Section 15-9(1) as the appellants were not informed of their rights to be taken to a Gazetted Officer or a Magistrate before their personal search was conducted. Reliance in this behalf has been placed on PTCL 1992 CL. 155 5(C), PTCL 1986 CL. 270, PTCL 1986 CL. 363 and CGO 9/81, PTCL 1990 CL. 109 PTCL 1988 CL. 29 and PTCL 1989 CL. 65.
(ii) Foreign currency seized from them cannot be legally confiscated as they have already been acquitted in this case by the Special Judge Customs, Lahore on 15.11.1994 on the ground that possession of foreign currency does not constitute any offence.
(iii) Possession of foreign currency at the given point of time was not an offence because it was no longer a prohibited or restricted item. Reliance has been placed on the decision of a case "Collector of Central Excise and Land Customs etc. Vs. Rahim Din (1987 SCMR 1840), the judgments delivered in Writ Petitions Nos. 3189 of 1992 and 7424 of 1989.
12. The appellants have prayed that the impugned orders may be set-aside, the appeal accepted and the unlawfully confiscated currency be restored to them.
13. The point to be determined in this case is whether at the given point of time mere possession of foreign currency would fall within the mischief of section 2(s) and I6 of the Customs Act, 1969, punishable under section 156(1)/89 ibid.
14. The case of the Department is that the currency-in question had not been acquired in a lawful manner as the documentary evidence furnished therefore, on investigation and verification carried out in coordination with the Customs authorities of the Karachi Airport, was found to be fake. It was, therefore, conclusively presumed that the clearance of the subject currency was either taken in a clandestine manner in breach of the prohibitions and restrictions at the time of arrival or the same was brought from across the frontiers of Pakistan through unauthorized route.
15. The appellants, however, maintain that as there was no prohibition or restriction in vogue for bringing of foreign currency into Pakistan at the given point of time, the possession thereof no longer remained an offence in terms of Section 2(s) and I6 of the Customs Act, 1969 read with Section 8(1) of the Foreign Exchange Regulations Act, 1947, punishable under section 156(1)/89 ibid. To substantiate their stand, the appellants have quoted the judgment reported as PLD 1986 Quetta 305/ against which leave to appeal was not granted by the Honourable Supreme Court of Pakistan and, therefore, the same attained finality.
16. The Tribunal has given careful consideration to both these points of view. The basic point to be determined in this case is whether possession of foreign currency was an offence in terms of section 2(s) and I6 of the Customs Act, 1969 read with section 8(1) of the Foreign Exchange Regulations Act, 1947, on 12.8.1989 when DM 17000 and Saudi Riyal 26000 were seized from the appellants.
17. The correct legal position is that at the given point of time, as there was no prohibition or restriction in vogue for bringing of foreign currency into Pakistan, its possession thereof no longer remained an offence under the Customs Act, 1969. The judgment of the Honourable Baluchistan High Court reported as PLD 1986 Quetta 305 which attained finality has removed doubts, if any, in this behalf.
18. In view of the above, the orders passed by the learned Collector of Customs, Lahore, being incorrect in law and on facts are set-aside and the appeal accepted. As a result thereof, the subject currency stands restored to its rightful owners.