Facts, as alluded to in the petition, are that petitioner is an Afghan firm while Sher Gul is its proprietor who is an Afghan national. Six containers comprising 2084 cartons of cigarette paper and filter paper were imported by the petitioner's firm from France and. Austria for Afghanistan. The consignment 'arrived at Karachi through sea for onward transit to Afghanistan through Pakistan.
Under Afghan Transit Trade Agreement, 1965 (ATTA) goods that arrived at Karachi or any other port imported for Afghanistan are to cross the country and border of Pakistan without payment of Customs, Excise duties or any other charges except those which are mentioned in the Agreement, 1965 executed between the two countries.
2. It is alleged and argued that respondent No,4 i,e,Collector of Customs (Export) verified the goods and declared the same to be not on the negative list (ban item) and were covered with transit import documents. Goods were removed to transit shed where the bills of entry were prepared.
However, respondent No,4 detained the goods under the instructions of respondent No,2 i,e, Central Board of Revenue and the petitioner was informed that his case has been referred to respondent No,3 (Federation of Pakistan Secretary Commerce).
Goods were, however, released from Karachi for transit to Afghanistan on payment of Rs,5,60,000 as demurrage charges. The consignment was loaded in railway wagons and it reached Peshawar Custom Dry Port on 31-8-1998. Once again the goods have now been detained by respondent .No,1 on the same pretext that such goods cannot be released under the instructions of respondents Nos.2 and 3 and as no other adequate remedy was available to the petitioner, hence this petition.
3. Learned counsel for the petitioner argued that under the terms of Afghan Transit Trade Agreement, 1965 and the protocol annexed therewith, the provisions of Customs Act, 1969 are not applicable to the case of the petitioner. The detention of transit goods in Peshawar being violative of a bilateral agreement executed between the two sovereign countries, no subordinate authority (as in this case respondent No,1) has got any lawful authority to deviate or to violate the terms of agreement. It was argued that the respondents should perform their functions in respect of Afghan Transit Goods in terms of Afghan Transit Trade Agreement.
4. It was next contended that the procedure for regulating transit goods through Pakistan for foreign parties can only be prescribed by framing rules under section 129 read with section 219 of the Customs Act, 1969 and in absence thereof no embargo can be placed by the respondents and the action if taken unilaterally would be negating the effect of bilateral agreement.
5. Learned counsel for the respondents, while addressing arguments at the bar and in their parawirt comments, have made challenge to the maintainability of the petition. It was argued on their behalf that the Custom Authorities at Karachi as well as Dry Port, Peshawar have doubted the genuineness of the firm (petitioner) and also the authenticity and validity of letter of credit at Kabul by an Afghan Bank. It was submitted that the imported transit consignment is not to be used in Afghanistan but the same would find its way back into Pakistan and would, thus, be consumed in Pakistan whereby a tremendous loss is likely to be caused to the economy of the country. Learned counsel for the respondents also submitted that the .Petitioner had under the same title filed another Writ Petition bearing No,1879 of 1998 which was withdrawn on 9-3-1999 without any reservations, would be taken as estoppel against the conduct of the petitioner in pursuing the present petition.
6. After hearing the learned counsel for the petitioner and the respondents, we would first refer to a letter placed on file, dated 3-8-1998 'from Mr. H.A. Shirazi, Chief (Customs Procedure) addressed to the Collector of Customs, Karachi which shows that the goods imported, which are subject' matter of this petition, are not on the negative list. It was, therefore, that the Central Board of Revenue vide letter, dated 12-8-1998 directed Collector Customs (Export), Karachi to allow the transit of the consignment. The present grievance arose when the same consignment was once again stopped/detained by customs staff of Dry Port Peshawar on the pretext that documents require scrutiny and verification under the provisions of section 26 of the Customs Act. Learned counsel for the respondents has produced before us a letter from the Ministry of Foreign Affairs, Islamabad, dated 4-12-1998 whereby two options were suggested to the Central Board of Revenue which are:- --
(a) Government of Pakistan should buy the item at the rate on which the Afghan consignee has purchased it and then sell it to the Cigarette Manufacturing Factories in Pakistan. or
(b) The consignee may be allowed to take it back to any other country and sell it.
' He has also produced before us another letter from Central Board of Revenue, dated 15-12-1998 showing the apprehension that as no cigarette manufacturing factory exists in Afghanistan, the fear is that such consignment would be smuggled back into Pakistan and as such they would escape federal taxes, besides customs duty leviable thereon, and such re-entry into Pakistan of the goods/consignment amounts to a security issue for the economy of Pakistan. Therefore, it was suggested that the item of such consignment be excluded from Afghan Transit Trade Agreement.
Ministry of Commerce was requested to reconsider the stand point of the Central Board of Revenue, as mentioned above.
7. Similar detention of tyres and tubes became the subject-matter of a writ petition before Karachi High Court where in case of Messrs Najib Zarab Limited v. Government of Pakistan and 4 others (PLD 1993 Kar. 93) a Division Bench of the Karachi High Court set aside the orders of the respondents who have detained the consignment of tyres and tubes which were so held at Karachi under the same objections as are raised against the present petitioner by the respondents. The Division Bench of the Karachi High Court accepted the writ petition which was ultimately challenged before the Supreme Court of Pakistan. It was in Federation of Pakistan and 5 others v.
Jamaluddin and others Civil Appeal No,361 of 1993 and two others Civil Appeals bearing Nos.520 of 1993 and 521 of 1993 (1996 SCM R 727) wherein the Hon'ble author Judge has extensively dealt not only with merits of the case but has reproduced the text of each of the article forming part of Afghan Transit Trade Agreement and its effect. The august Supreme Court ultimately upheld the judgment of the Karachi High Court, and we may with privilege refer to certain portions of the main judgment, and are given below:-- "C.B.R. And/or the Collector of Customs could not lawfully ban/disallqw import of goods by Afghan nationals under the Afghan Transit Trade Agreement and refuse the facility of transit through the territory of Pakistan in respect of such goods during the subsistence of the said Agreement.
Keeping in view the background of the Transit Agreement and the fact that Afghanistan is a land- locked country, the goods imported by Afghan nationals 'from other countries for use and consumption in Afghanistan could not be said to have been imported into Pakistan merely because they crossed the Customs barrier and entered into Pakistan, though to be transited to their destination viz. Afghanistan. Such goods, in fact., are goods in transit to be dealt with and transshipped to Afghanistan in accordance with the Transit Trade Agreement and the protocol appended thereto. Customs law relating to the importation would not, therefore, be applicable to them.
' If the grievance of the Authorities Was, that the tyres and tubes after entering into Afghanistan illegally re-entered into Pakistan and are mixed up with mass of other tyres and tubes, then other remedies might be open to the Authorities. The alleged smuggling of the tyres into Pakistan could not furnish any valid justification to the authorities to unilaterally take away the facility of transit or to impose any restriction on the duty-free import itself which was guaranteed by the Transit Agreement. Customs Authorities should have proceeded under Article VIII of the Transit Agreement or recourse should have been taken to the machinery provided under Article XII of the Agreement which provides for negotiation and in the event of failure of negotiations, to refer the matter to an arbitrator acceptable to both the parties whose decision would be binding on them. Failing to find any solution through this mechanism, the Government of Pakistan could terminate the Transit Agreement which is terminable at the instance of either party at any time after giving six months' notice of termination and re-negotiate fresh terms cf the Transit Agreement. So long as the Afghan Transit Trade Agreement of the year 1965 is subsisting, the authorities had no option but to allow the goods in transit to be transited to Afghanistan in accordance with the terms of the said Agreement and the procedure laid down in the Protocol and the Annex appended therewith.
Section 129 of the Customs Act also requires the Customs Authorities to allow the goods in transit to be transmitted to the country of their destination without payment of any duties which are otherwise chargeable thereon. There is no provision in the Customs Export Transit Rules to show that the Customs Authorities had any jurisdiction to impose ban on the import of goods intended to be transmitted to another country across the territory of Pakistan or to refuse to allow the transit of such goods to that country."
In view of what has been held by the august Supreme Court and as Afghan Transit Trade Agreement, 1965 subsists and is in existence, and in the absence of any amendment or redrafting of such Agreement, the respondents have got no lawful authority to detain the consignment of the petitioner. The apprehension of the respondents about the goods in transit being smuggled back to Pakistan may factually be correct but on legal premises as held by the Supreme Court, the Courts of law are to apply and interpret the law as it exists and where in the implementation of such laws any loopholes/lacunas or defects, such as re-entry of the consigned goods into Pakistan without payment of duties etc., is for the administration to have effective surveillance or to adopt such method and take such measures to avoid the re-entry of goods into Pakistan.
' As for the objection raised by the learned counsel for the respondents about the withdrawal of Writ Petition No,1879 of 1998, the same has got no bearing as the petitioner could not and should not have pursued two matters in respect of same consignment. It was his option which he could have exercised according to his will.
It, therefore, follows that in view of Afghan Transit Trade Agreement, 1965, no lawful authority vests in the respondents to detain the goods/consignment in transit to Afghanistan. This writ petition is, therefore, allowed and the action taken by respondents is held to be without lawful authority and of no legal effect. The goods detained should be released forthwith and the respondents are directed to act in the matter in accordance with law. The prayer in respect of refund of demurrage charges is left to be negotiated between the parties as any actual charges incurred by the respondents should be deducted and no more. Parties are to bear their own costs.