P L D 1967 Supreme Court 458 (PLP)

S. A. RAHMAN, J.‑‑This order will dispose of Civil Appeal No. K/76 of 19(4 and Petition for Special Leave to Appeal which has not yet been registered, but which is connected with the Civil Appeal as will appear from the sequal. The case has a history. Some 33 bars of gold of 100 tolas each, were seized by order of the Collector of Customs in Karachi, sometime in 1955. It was stated that Muhammad Sharif, appellant No. 2, a partner of Messrs S. A. Haroon, who is the first appellant m this case had advanced money to Messrs Islam Commercial Corporation against the delivery of this gold which the Corporation was to purchase from certain sellers through the Karachi Bullion Exchange. Five bars out of the 33 were seized from Muhammad Sharif and one bar from Muhammad Anwar, a partner of Messrs Islam Commercial Corporation. The remaining 27 bars were recovered from the Eastern Bank Ltd., where they were deposited on account of Messrs S. A. Haroon. The gold in question was alleged by the Customs authorities to have been brought into the country across the Customs Barrier, without payment of the requisite duty and in contravention of a notification issued by the Government of Pakistan, Ministry of Finance, on the 1st of July 1948, prohibiting the import of "gold coin, gold bullion, gold sheets and gold ingots whether refined or not", except with the general or special permission of the State Bank of Pakistan. The Collector of Customs, by order, dated the 28th December 1955, confiscated the gold in question, holding that its lawful import into the country had not been proved. In lieu of confiscation the owners or possessors of the property in question were given an option of paying heavy fines of Rs. 3,51,000 in the case of appellant No. I and Rs. 65,000 in that of appellant No. 2 and in addition personal penalties, ranging between Rs. 5,000 and Rs. 1,00,000 were imposed on them. The order of the Collector was challenged by a writ petition, submitted to the Karachi Bench of the West Pakistan High Court. The petition failed in the High Court and, an appeal was then brought by special leave, to this Court. This Court quashed the Collector's order, by judgment, dated the 26th of March 1959. The Collector was, however, left free to proceed with the enquiry in the case, in the light of the observations made in the judgment. It was held in that case that the initial onus lay on the Departmental authorities to establish prima facie that the goods seized were covered by the description given in the relevant notification, by which the ban or restriction on its import was imposed. This conclusion was arrived at a consideration of Item 81 of section 167 and section 177‑A of the Sea Customs Act. If such a prima facie case existed it would only then be legally possible to call upon the possessors of the goods in question, to establish their lawful possession. The condition precedent for the exercise of jurisdiction by the Collector of Customs was, therefore, to establish the evidential presumption based on facts, in respect of the alleged illegal import of the seized goods. The mere allegation that the goods bad been imported would not suffice in this regard. This legal position bad been ignored by the collector while passing his first order. In the enquiry which was called in question in the earlier appeal it was held, inter alia, that the Collector had also committed an error in not giving a fair opportunity to the persons concerned to rebut the report of the Assayer of the Lahore Mint in respect of the fineness of the gold seized, on which the Collector had relied. The Collector of Customs, in pursuance of the direction of this Court, held a fresh enquiry and passed an order on the 5tb of May 1962, under section 167(8) and 167(81) of the Sea Customs Act, 1878, confiscating gold weighing 2,700 tolas odd and imposed a fine in lieu of confiscation, of Rs. 3,51,000 on Messrs S. A. Haroon, Rs. 65,000 on Muhammad Sharif and Rs. 13,000 on Muhammad Anwar. Muhammad Sharif, it may be noted is a business partner of Messrs S. A. Haroon, while Muhammad Anwar is a partner representative of Messrs Islam Commercial Corporation. From this order, the present appeal by special leave was filed by Messrs S. A. Haroon and Muhammad Sharif. While the appeal was pending in this Court, an appeal from the Collector's order was also submitted to the Central Board of Revenue by the appellants. By order, dated the 22nd March 1966, this Court considered it desirable to await the decision or the Board of that appeal. The hearing of the appeal was, therefore, adjourned for the purpose. By order, dated the 18th of March 1967, the Central Board of Revenue dismissed the appeal and affirmed the findings of the Collector of Customs. By way of precaution, a petition for special leave to appeal from the order of the Central Board of Revenue has also been submitted to this Court. An objection is raised by Mr. Nusrat, on behalf of the respondent, that such a direct appeal was no longer possible under the present Constitution, from the order of the Central Board of Revenue. It may, however, be pointed out that this Court has been properly seized of the appeal from the Collector's order and it cannot be said that the Court has become divested of its jurisdiction to dispose of that appeal, by the order passed by the Board on the Departmental appeal. The Board has merely affirmed the findings of the Collector and if on examination it is found that the Collector's order is not sustainable in law, the whole superstructure, including the appellate order of the Board, would fall with it. In the circumstances, Mr. A. K. Brohi has not pressed the petition for special leave to appeal, but we have heard the parties on the main] appeal. The petition for special leave to appeal is dismissed as] withdrawn. The main contention of Mr. Brohi in support of the appeal is that the Collector failed to follow the law as laid down by this Court in the earlier decision and his order suffers from the same infirmities which bad been commented upon in the judgment of this Court, rendered in 1959. His grievance is that without discharging the onus of establishing prima facie that the seized goods answered to the description of the goods mentioned in the relevant notification, the appellants have been called upon to prove positively that the goods in question had been lawfully imported. This, it is contended, was beyond the jurisdiction of the Collector and, consequently, the impugned order would not be sustainable in law. We proceed to examine this aspect of the case. The Collector's order appears at page 47 et seq of the paper book. The learned Collector has given three reasons for holding that the goods in question were "obviously of foreign origin". The first reason adduced in support of this prima facie finding is that gold is not foul or produced in Pakistan. It would be pertinent to reproduce some observations of my Lord the Chief Justice from the previous judgment of this Court, which have relevance to this point. The extract tuns as follows: "In so large a country as Pakistan, with a civilization going.* * * * * for several thousand years, it is a very lively possibility that a considerable proportion of gold in circulation in the country, even as bullion, has been in the country almost from pre‑historic times. Gold ornaments have been discovered in excavations of cities which flourished as long as four thousand years ago. Moreover, the melting down of gold jewellery for conversion into other forms of jewellery is a process; which is repeated over and over again through the centuries. It is quite possible that gold which was in circulation in this country at the period of, say, Alexander the Great, may have been since then melted down and re‑refined some two hundred times or more. In the process, the degree of purity must undoubtedly improve, and where the refinement is effective, there one would expert that over a number of centuries, the degree of purity achieved would improve to the point of almost perfection." It would also be useful to set out the observations of Muhammad Munir, C. J., from the previous judgment in the present case, which have a bearing on this point. The learned Chief Justice said: "To make the goods liable to confiscation or the possessor thereof liable to a penalty or imprisonment, the prosecution will first have to show that the goods are chargeable with a duty which has not been paid or that their importation is for the time being restricted or prohibited under Chapter IV of the Act." The previous judgment of this Court provided sufficient guide lines for the Collector if be had taken the trouble of examining it with care. In the face of the above observations, it would be idle to press into service the fact that Pakistan is not a producer of gold as a positive indication that all gold found in the country was of foreign origin and therefore, ipso facto covered by the notification in question. This procedure amounts to shutting one's eyes to the fact that a lot of gold had existed in this country from very ancient times. The first reason, therefore, that formed the basis of the Collector's order can hardly suffice to establish prima facie that the gold in question must have been imported, in contravention of the notification, The second reason that prevailed with the learned Collector was that the report of the Assayer of the Pakistan Mint at Lahore, to whom 33 samples of the seized gold were sent along with 5 other samples of locally refined gold, had proved that the samples of the seized gold had a higher fineness than the maximum fineness achieve-able in the country by refining gold ornaments. This factor, according to the learned Collector, left no doubt that the gold contained in the slabs seized was of foreign origin or imported. In this connection, the position of the appellants was that they should have been allowed to cross‑examine the Assayer who was a witness for the Department. At one stage it seems that the Collector directed that the Assayer should be called for the purpose of allowing an opportunity to the appellants to cross examine him. Latter, however, a condition was imposed that the appellants should deposit a sum of Rs. 800 to cover the expenses of his travelling and stay at Karachi before he could be summoned. To this demand the appellants replied that the witness had made statement in favour of the Department and if the Department chose to rely on that statement, it was for them to make the witness available for cross‑examination. This attitude may not have been strictly justified in the case of a tribunal which is charged with the duty of adjudication in a quasi judicial manner. The Collector it is conceded, is not bound by the rules of evidence. For whatever it was worth, therefore, the report contained in the statement of the Assayer could be treated as relevant material by the Collector and no principle of natural justice would be violated if adequate opportunity was given to the appellants for rebuttal of this material. The Collector called upon the appellants to submit interrogatories for further examination of the Assayer but this offer was also not availed of. The appellants, however, did attempt rebuttal of the Assayer's report, which is dated the 20th of September 1955. They produce in the second enquiry before the Collector, a certified copy of the statement made by Mr. Abdul Jalil, Superintendent of the Assay Department of the Government Mint at Lahore, in another case before a Civil Judge, in which he had deposed that the maximum fineness of gold achievable in Pakistan was 999.3 for 1000 parts, which the witness had obtained by a refining process carried out in Suha Bazar, Lahore. He also stated that the standard quality of Mint gold had a fineness of 999.5 for 1000 parts. This statement was made on the 12th of March 1960. In addition, a copy of a judgment of the Central Board of Revenue, dated the 9th October 1960, was relied upon by the appellants, in which it had been held that, in accordance with the opinion of Mint Officers at Lahore, the fineness of 998.9 and 999.8 per 1000 parts, could be achieved by usual methods of refining, adopted in this country. This material has to be placed in extra‑position with the opinion of the Assayer on which the Collector relied, to the effect that the fineness of gold refined in the private refineries can vary between 994.3 to 997.5 as the live samples submitted to him showed. The source of these 5 samples is not revealed and it is by no means certain that they represent the best that local refineries could achieve, in 1955. Out of the 33 samples of the seized gold in the present case, sent to him, 26 were found to be of higher fineness than that of these 5 samples, but 7 were of lower fineness. None of the higher figures apparently exceeds the figures of fineness declared as achievable by local methods of refining in Pakistan, according to the Board's order, dated the 29th October 1960. The two opinions, therefore, which were marshalled by the appellants in rebuttal of the Assayer's report, had necessarily to be taken into account before arriving at a conclusion in this case. The Assayer's categorical statement by itself could not be accepted as conclusive. The treatment of this rebuttal material by the learned Collector appears to us to be open to grave exception. The learned Collector was of the opinion that as the Mint report on which he had himself relied; was not challenged till the verdict of the Supreme Court in 1959, the statement of Mr. Abdul Jalil in the Civil Court and the Board's order in another case were not relevant. By what process of reasoning the learned Collector convinced himself of the justness of this inference, is not easily comprehensible. To us it appears that the material adduced in defence by the appellants was if possible of relatively higher status than that, utilized by the learned Collector for his decision in so far as it had the weight of authority behind it of an order passed by the Central Board of Revenue itself. In no case could this material be disregarded as irrelevant. There is no warrant for the assumption made by the Collector apparently to the effect that refining methods in Pakistan may have improved in 1960 as compared with 1955. The value of the material adduced in rebuttal had to be assessed in comparison with the opinion expressed by the Assayer. It is plain that if all this material had been considered together it could not be said that the state of fineness of the seized gold was a probable indication of its foreign origin, much less a conclusive one. It is remarkable that in a letter sent by the Collector, dated the 29th of August 1962, to the Central Board of Revenue, appearing at p. 133 et seq of the record, it is stated that the origin of gold cannot be based exclusively on the state of purity of the gold and that the degree of fineness is no measure to determine the origin of the gold. This opinion would seem to be in direct conflict with the Collector's own findings in the impugned order which is based principally on the point of fineness of the seized gold. The third reason advanced by the Collector in his order for holding the gold in question to be imported gold is that all the bars were of 100 tolas each. He remarked that these bars were "obviously made by melting small bars of foreign gold in order to circumvent the foreign origin". This amounts really to begging the whole question. There is no warrant in the material on record, for the assumption made by the Collector that small bars of foreign gold had been melted to make bars of 100 tolas in each case. This remark has absolutely no basis, so far as we can discover, from the documents on record. It is curious that in respect of seven bars of gold in which the fineness was ascertained to be lower than the maximum achievable in Pakistan, the learned Collector held that "obviously during the process of melting and marking bars of 1G0 tolas greater quantity of alloy was mixed in the 7 bars, but this does not change the origin of the gold" It seems to us that the learned Collector had assumed that the gold was foreign in origin and then proceeded to draw the conclusion that even if the fineness was of lower order, it must have been the result of some manipulation by the appellants. This view rests on no solid foundation in the materiel on record. It sounds very much like saying to the appellants; "Heads or tails, you lose." It is to be regretted that the Central Board of Revenue while examining the case in appeal did not advert to the weaknesses in the Collector's orders and re‑affirmed it merely on the same considerations as bad appealed to the Collector. Indeed though a reference was made to the opinion of Mr. Abdul Jalil, the Board did not at all refer to their own previous judgment on which the appellants had relied for contradicting the opinion of the Assayer. The transaction in question which the appellants had entered into was an open‑market transaction through the Karachi Bullion Exchange and the purchase was being made from parties whose names were open to inspection. This position was not challenged by the Collector who proceeded on mere assumptions to hold that the gold in question must have been imported. Even if the gold in question was locally refined, there was nothing to prevent the refiner from turning it into bars of 100 tolas each and the mere fact that 'each bar was of 100 tolas could not lead to the inference that this was due to commouflaging operation. We have, therefore reached the conclusion that the Collector's order was not; sustainable in law inasmuch as, on a fair consideration of the material before him the inference could not be said to arise that the gold in question must have been imported from abroad. The appeal succeeds and is allowed with costs and the Collector's order is hereby quashed. A. H. Appeal allowed.