2004 PLP (Trib (PTD)

(II) the case has been made out on the basis of the statement made by Mr. Waseem Yousafi and the entries appearing in the bank account.

9. I have heard the rival parties and case record has also been examined. In order to dispose of this appeal, following issues are framed. (a) whether or not visit and subsequent investigation was conducted by a competent officer within the framework of law; (b) whether or not relying on a non‑prescribed record was legal to frame a charge? (c) whether or not evidence exists on the basis of which a case of evasion of duty stands established against the appellant? (d) whether or not evidence on record has properly been appreciated?

10. As regards the first issue, as per the records the staff of the Directorate of Intelligence and Investigation (Customs and Excise) Karachi, visited the said unit on the directions of their Deputy Director, in fact a team of officers visited the premises of the appellant on 23‑9 1996 and asked the appellant to produce the records if maintained in respect of central excise duty leviable on courier services. The show cause notice further states that the appellant produced the records which was checked in his presence end it was found that the appellant has failed to pay central excise duty. Accordingly a contravention report was made out. From the above statements, it is evident that the Directorate's team was verifying the fact that whether or not the appellant was maintaining accounts books in accordance with law, as under rule 226 of the Central Excise Rules, 1944, he was bound to maintain such records.

11. However, where a manufacturer or a service provider fails to render proper accounts as prescribed by the Central Excise Rules, 1944, then in that case a Central Excise Officer not below the rank of Superintendent has been authorized to determine the amount of liability. Whereas in this matter the liability has not been worked by an authorized officer. Furthermore, within the framework of law, the scrutiny of record was only restricted to the prescribed records, whereas the visiting team in this matter altogether disregarded the prescribed records. This fact gains strength from the statement given by the departmental representative before the adjudication officer. He stated: "...After examination of the case file it is learnt that detecting officer has made out the case on presumption not on facts: They have ignored the basic document of courier services is consignment note: Each and every courier is particularly bound to issue a copy of consignment note to their clients and calculate the central excise duty on the basis of the consignment notes issued by them to their clients during the month if we calculate their total amount of their services pertaining to the period mentioned in the contravention report and calculate central excise duty upon it and compared from their treasury challans and station wise statement if both were found totally to each other, then we safely say that there is no evasion of central excise duty and further asked the party to prove their funds and its resources from which they obtained it in order to probe out the reality ....

12. Rather than applying the law, the adjudication officer was swayed away by the statement of another officer who stated: "...The record of the case has been examined thoroughly. It is a well established case on the basis of documentary evidence. The case has been made on 23‑9‑1996 and statement of the partner Mr. Waseem Yousafi has also been recorded on the spot which is on record and is a part of this case. In his written statement Mr. Waseem Yousafi confirmed the facts of the case by, declaring the sales (service charges) with relation to his business of courier services for the period 1995‑

96. The statement is duly signed by him without mentioning any remarks if the statement was recorded under duress and since then there is no evidence on record or any objection in this case. The said statement may kindly be perused which is placed at page 21/C in this file. This self confessed statement itself proves the facts of the case beyond doubt. In view of the above fact, there is no room for the party to escape from payment of his liability as to central excise duty involved in this case at this stage of the case..."

13. On the basis of above evidence, the conclusion of the adjudicating officer was as under:‑‑ "...I have gone through the facts and figures of the case and it appeared that as per written statement of the partner of the firm Mr. Waseem Yousafi son of Muhammad Naseer Khan, it is admitted that they received the payments against courier services and deposited the same in National Bank of Pakistan, FTC Branch. Thus, the calculation of central excise duty by the department on the basis thereof are correct, specially, when the respondents did not furnish any proof that any other payment was also being deposited in that account. Perusal of Bank Statement furnished by the detecting side, it appeared that Messrs Airman Services provided courier service valued at Rs.36,88,334.50 for the period of 1‑7‑1995 to 30‑6‑1996 whereupon an amount of central excise to the tune of Rs.3,68,833.45 was to be paid by the respondents. But he did not discharge his total liabilities..."

14. An analysis of the said statements and observations made by the adjudication officer reveal that the adjudicating officer never applied his independent mind. Though he was bound to consider whether or not investigations conducted by the Directorate were within the framework of law; yet he never bothered to review the said aspect of the case.

15. It is pointed out that Mr. Saeed‑ul‑Zafar on behalf of the department had rightly stated that the visiting team had made out the instant case on presumptions and not on facts. He was perfectly right in drawing attention towards legal provisions contained in Central Excises Act and Rules, law and procedure chalked out in this regard whereunder in terms of rule 226, the visiting team ignored to study and analyze the basic document namely, `Consignment Note,' as each and every courier' is bound to issue a copy of consignment note to their client and the quantum of excise duty is worked out on the basis of the consignment notes. And the comparison of said document, vis‑a‑vis duty paid by the appellant, did reveal that the appellant had paid his duty according to the charges received amount from their clients. Had there been discrepancy in these documents, then other piece of evidence would have been relevant for drawing inference.

16. For appreciating the said proposition, it would be appropriate to go through the actual rule prescribing the procedure for payment of central excise duty. The relevant rule is rule 96ZZH, and its provisions are reproduced below:‑‑ "...96ZZH Special procedure of collection of Central Excise duty on courier services.‑‑‑(1) All persons providing or rendering courier service in Pakistan shall pay the central excise duty leviable on the charges. (2) The duty shall be paid on the charges received by the persons providing or rendering courier service to their customers. (3) Every such person shall pay the duty due from him for a month by the 15th day of the following second month and, (by the end of the same month) of such payment, furnish to the Collector, Central Excise, in whose jurisdiction the head office of each courier service is situated, the proof of such payment alongwith station‑wise statement showing the details of such services provided or rendered, the charges received thereon and the duty paid thereon. (4) In case the duty is not paid by any person providing or rendering courier service, by the due date, he shall, in addition to the payment of duty (and additional duty, be also liable to penalty) (under these Rules).."

17. A bare reading of the said provisions of law indicates that on courier services, the duty is leviable on the charges, the duty is payable on the charges received from their customers, the proof of duty payment is to be submitted to the concerned Collector alongwith station‑wise statement showing the details of such services provided, the charges received and the duty paid, and in case a courier service failure to pay duty, he will be liable to pay penalty.

18. Here the question arises whether or not the investigation did probe the documents as prescribed by law. The straightforward answer is a big no.

19. Furthermore, the legislature has intentionally kept this function within the ambit of specified officers who according to their wisdom were more competent to resolve such issue. Now taking away that function by an unauthorized officer in absence of any express provisions of law amounts to abuse of power.

20. In the case of Government of Pakistan v. Shahi Bottlers reported as 1987 SCMR 571, their lordships of the Honourable Supreme Court did consider this very same issue and observed that‑‑‑ "...An analysis of sub‑rule (2) of Rule 226 of the Central Excise Rules, 1944., shows that there must be a rule prescribing maintenance of accounts regarding manufacture, storage or disposal of excisable goods. In the case of raw materials, there must be a rule prescribing the maintenance of accounts of the receipts of raw material, its storage, its utilization or its disposal. The existence of a rule requiring the maintenance of accounts in the matter indicated in first part of Rule 226 is a sine qua non for invoking sub‑rule (2) or its proviso. Secondly, before invoking sub‑rule (2) or its proviso it must be held as a fact in each case that the rule prescribing the maintenance of accounts has been violated. It is only when these two pre conditions are satisfied that the officer concerned can exercise his authority to demand from the manufacturer on the basis of raw material such excise duty as it is in his judgment payable by him on goods. That should have been produced from such raw material..."

21. The ratio decendi of the judgment is that for initiating an action in terms of sub‑rule (2) of Rule 226 of the Central Excise Rules, 1944, presence of two conditions are necessary i.e., (i) the existence of a rule D requiring maintenance of accounts in the manner indicated in first part of Rule 226; and (ii) before invoking sub‑rule (2) or its proviso, it must be held as a fact in each case that the rule prescribing the maintenance of account has been violated.

22. The upshot of the above discussion is that the visit and subsequent investigation conducted by the Directorate of Intelligence and Investigation (Customs and Excise) was not only illegal but also conducted by an officer who was not competent to act in that manner. And as has rightly been pointed out by their lordships of the Supreme Court, that in order‑ to conduct scrutiny of record in terms of rule 226 of, the Central Excise Rules, 1944, there must have been a rule to prescribe those documents being relied upon by the respondent. In absence thereof framing of the charge of fraud against the appellant on the basis of a non‑prescribed record would be unjustified and illegal.

23. As regards the statement of Mr. Waseem Yousafi, it states that the appellant was a licence holder (an admitted fact). He further stated they had been depositing the due excise duty in time and for that copies of the treasury challans were produced. This fact has also not been denied by the respondent. He further stated that, an amount of Rs.3,31,698 was deposited in the bank account including, the sale of courier service. The respondent has interpreted his statement out of context. Furthermore, there is no verification report from the bank detailing out, the details of the amount of deposits and same was never obtained for explanation of the appellant. Furthermore, that the statement relied upon by the department was not relevant in terms of rule 226 of, the Central Excise Rules, 1944. Furthermore, it appears that the statement was apparently taken under duress and threat, hence the same loses its strength as a piece of evidence. And furthermore, it does not relate to the prescribed records, hence its admission as a piece of evidence was illegal.

24. The next question is with regard to the admissibility of statement made by Mr. Waseem Yousafi. In view of the reply to the show‑cause, notice it does not remain an admission. Furthermore, since the statement Was made at a time when "Mr. Yousafi was in the custody of the Customs; Enforcement Staff, making inference from it was not admissible. Even otherwise the statement made by Mr. Yousafi does not fall in the exceptions provided in Article 34 of the Qanun‑e‑Shahadat Order. In that event the procedure as laid down in Article 140 should have been adopted particularly in view of the reply to the show‑cause notice and as the provisions of Article 140 of the Qanun‑e‑Shahadat Order were not followed, hence the reliance of the respondent on the statement of Mr. Yousafi was not warranted in law.

25. The perusal of case records indicates that there was ample evidence available on record including the statement of Mr. Saeed‑ul -Zafar, the departmental representative; who very correctly placed on record the legal position and the same was not considered by the respondent either.

26. There is yet another aspect of the case, Which cannot be ignored. After the examination of the impugned order I find that the same is sketchy, slip‑shod and devoid of reasons. The said order is not at all a speaking order and cannot be called a "quasi judicial order" within the parameters set up by law. The tenor of the order amply manifests non application of judicial mind and no reasons have been assigned by the learned adjudicating officer in coming to the conclusions. Even it has been enjoined upon an executive authority, as per section 24‑A of General Clauses Act; 1897 (inserted by General Clauses Amendment Act, 1997, Act No. XI of 1997) to give reasons for making the order.

27. Honorable Supreme Court of Pakistan has time and again disapproved the passing of such perfunctory orders in the causes involving valuable rights of the parties. It is settled law that a quasi judicial order must be a speaking order manifesting by itself that the Tribunal has applied its judicial mind to the issues and the points of controversy involved in the causes. Furthermore, when the, reasons would not be forthcoming, obviously the Appellate Court would be deprived of the views of the subordinate forum. In any way the impugned order, which is not a speaking order and devoid of reasons is not sustainable in law being in contravention of law declared by the Honourable Supreme Court of Pakistan in various cases like Adamjee Jute Mills Ltd. v. The Province of East Pakistan and others (PLD 1959 SC (Pak.) 272, Gouranga Mohan Sikdar v. The Controller Import and Export and 2 others (PLD 1970 SC 158), Mollah Ejahar Ali v. Government of East Pakistan and others (PLD 1970 SC 173) and Muhammad Ibrahim Khan v. Secretary, Ministry of Labour and others (1984 SCMR 1014) etc.

28. In the light of above, I have examined the impugned order and find that the same is not sustainable in law, thus, I have no alternative except to set aside the same. This appeal is accordingly allowed. S.A.K./114/Tax (Trib.) Appeal allowed.