MUHAMMAD ASLAM, TECHNICAL MEMBER.--1. This appeal has been filed by M/s. Scanmatic Systems
(Pvt) Ltd., Karachi against Order-in-Original No. 63/97 dated 12.08.1997 passed by the Collector of Customs (Appraisement), Karachi.
2. The staff of the Directorate General of Intelligence and Investigation (Customs and Excise), Karachi received a credible information that the appellants had supplied/a large quantity of contraband smuggled Distance Relay of foreign origin to Karachi Electric Supply Company (KESC) valued at Rs. 1,82,00,000/- vide Purchase Order No. A-08251 dated 17.08.1995.
3. In order to verify and ascertain the authenticity of the aforesaid information, the Investigation Agency issued a notice under section 26 of the Customs Act 1969 to the appellants requiring them to furnish import documents of the subject goods. Instead of so doing, the appellants replied vide their letter dated 20.08.1996 that they had purchased the said material from the local market in piece-meal. To substantiate this aspect as well they failed to produce the requisite receipts which could establish their bona fides in the matter. Further probe into the matter, however, revealed that the said goods had, in fact, been brought from Europe to Dubai and. Then to Karachi through baggage by one Mr. Nadeem Iqbal, who had made the supply of the same stuff to the KESC through the appellant firm. Apprehending that the investigation may not lead to any complication, the appellants made good the payment of Rs. 89,48,042/- being amount of the customs duty and other taxes leviable on the said quantity of goods through a Pay Order. As another discrepancy of identical nature too had come to the notice of Customs whereby the appellants had previously also supplied Convertors, type NWX- 511A-3R, to the KESC, herein also they paid an amount by way of another Pay Order, which covered duty and taxes leviable thereon.
4. As the persons involved in the smuggling of Relays and Convertors had Violated the provisions of sections 2(s), 16, 178 of Customs Act, 1969, punishable under clauses (1), (8), (9) and (89) of section 156(1) of the Customs Act 1969, they were served with a show cause notice to explain their position.
5. While pleading the case of the appellants before the learned Collector of Customs, Karachi, learned Counsel, Mrs. Ismat Mehdi submitted that as the Department had failed to establish beyond doubt that the subject goods were of contraband nature and had been smuggled into Pakistan, neither duty or taxes could be demanded nor any penalty could be imposed on her clients. She further submitted that as the appellants had, on their own, made payment of a huge amount just to clear the confusion, if any, the matter be dropped as such in the larger interest of justice and fair play. Another point made by her in this connection was that as such goods were freely importable into Pakistan and the local market was virtually flooded with them, it was not fair on the part of the investigating staff to force the appellants to come up with import documents or purchase receipts etc. For invariably the trading community does not make available such evidence while selling the stuff.
6. The learned Collector of Customs, however, did not agree with the aforesaid line of reasoning and concluded that the appellants had not established their bona fides in the matter by way of production of valid import documents for the subject goods which definitely were of foreign origin.
He, therefore, ordered the authorities concerned to adjust the amounts of duty and taxes which had already been paid by the appellants by way of two Pay Orders before the issuance of the show cause notice. In addition to this action, he also imposed a penalty of Rs. 1 million each on M/s. Scanmatic Systems (Pvt) Ltd. And Mr. Nadeem Iqbal under the relevant provisions of the Customs Act 1969.
7. While pleading the case of the appellants before the Tribunal at Karachi, learned Counsel, Mrs. Ismat Mehdi conceded that she was not in a position to establish beyond doubt that the goods in question had been brought into Pakistan in a lawful manner. She, however, emphatically submitted that as the appellants voluntarily made payment of Rs. 89,48,042/- in respect of Distance Relays supplied to KESC vide Purchase Order No. A-08251 dated 17.08.1995 and Rs. 8,56,000/- in respect of the supply of Convertors vide Purchase Order No. A-08250 dated 17.08.1995 before the issuance of the show cause notice, it was un-fair on the part of the learned Collector to still impose a penalty of Rs. 1 Million on the appellants although, he clearly stated in the last para of his order that they had made payment of the aforesaid dues voluntarily. Her only plea was that the penalty of Rs. 1 Million being unwarranted and un-justified be remitted as such because the appellants did not, at any stage, resist payment of the principal amount or adopt any tactic to cause delay therefor.
8. The stand of the learned D/R was that as the appellants had brought contraband smuggled goods into Pakistan and the duty and taxes were paid only when they were left with no other option, the learned Collector was fully justified in imposing the penalty which, being a token figure, should be kept intact.
9. We have examined the case record thoroughly, heard both sides in detail and addressed ourselves to the relevant provisions of law. We are of the considered opinion that as the appellants did not show any resistance and voluntarily paid the amounts of duty and taxes in respect of the two supplies made to the KESC, retention of penalty on them would rather defeat the very purpose of justice. That being so, the penalty of Rs. 1 Million imposed on the appellants is remitted.
10. In view of the above, the orders already passed in the matter not being maintainable in the eye of law are set-aside and the appeal is accepted.