2006 PLP (Trib (PTD)

RAJ MUHAMMAD KHAN, MEMBER (JUDICIAL).

This is appeal against the consolidated Order-in-Appeal No.40 of 2002, passed by the Collector of Customs (Appeals), Collectorate of Customs, Sales Tax and Central Excise, Peshawar on 26-11-2002, whereby he dismissed the appeal of Munasib Khan appellant entered at serial No.7 of the list of appeals disposed of by the said Order-in-Appeal against the Order-in-Original No.724 of 2002, dated 13-8-2002 which was passed by the Deputy Collector, Customs (Adjudication), Peshawar.

2. Brief facts of the case are that pursuant to specific information, the staff of Customs Intelligence, Peshawar on 17-5-2002 intercepted Oil Tanker bearing Registration No.PRN-9584 at G.T. Road near Khairabad and found the same loaded with 18000 litres foreign origin petrol. The driver when asked to account for its import, produced delivery order issued by the Customs State Warehouse, D.I. Khan regarding auction of foreign origin 22000 litres petrol which was to be transported through Oil Tanker bearing registration No.LSB-35345 and not by the seized Oil Tanker bearing Registration No.PRN-9584. So it was observed that the delivery order of the State Warehouse was being misused. The Oil Tanker No.PRN-9584 was, therefore, seized for violation of the provisions of sections 2(s) and 16 of the Customs Act, 1969 (hereinafter referred to as the Act) read with section 3(1) of the Imports and Exports (Control) Act, 1950. A sample of petrol taken was got tested from the H. D.I. P. Laboratory Peshawar which reported that the seized petrol did not confirm to be of Pakistan standard. So on the second day i.e., 18-5-2002, the seized petrol was auctioned as was being inflammable goods for Rs.4,15,000 through the Customs Collectorate, Peshawar. Subsequently on adjudication of the matter, the Deputy 'Collector of Customs (Adjudication), Peshawar vide his Order-in-Original No.724 of 2002, dated 13-8-2002 held that the seized petrol was smuggled goods. He, therefore, ordered its outright confiscation in terms of sections 156(1)(9) and (90) of the Act read with section 3(3) of the Imports and Exports (Control) Act, 1950. The vehicle was also confiscated under section 157(2) of the Act but taking a lenient view in the matter, an option was given to its rightful owner/driver to redeem the same on payment of fine of Rs.75,000.

3. Aggrieved of the Order-in-Original, the appellant went in appeal before the Collector of Customs (Appeals), Peshawar, who passed the impugned Order-in-Appeal No.40 of 2002 on 26-11-2002 as mentioned in Para-1 above. Hence this second appeal to this Tribunal, wherein it is pleaded by the appellant, inter alia, that the seized petrol was legally imported into the country, commonly available in the local markets and that no option was given to him by the Adjudicating Officer under section 181 of the Act for the release of goods on payment of leviable duty and taxes. He also alleged that the redemption fine imposed against the vehicle was harsh and on the high side and his prayer for its remission was not considered at all by the Collector (Appeals). He prayed for the release of the seized petrol on payment of duty and taxes and for the remission of the fine. He also submitted application on 15-9-2004 for the refund of the sale proceeds of the auctioned petrol on the ground that he was not issued notice under section 201 of the Act prior to its auction and relied in this respect on the authority laid down by the Hon'ble Peshawar High Court, Peshawar in case vide S.A.O. No.25 of 2002 decided on 18-3-2003, titled Nowsherawan v. Collector of Customs, Peshawar.

4. The respondent-Collectorate was asked to submit reply to the application of the appellant, dated 15-9-2004 vide order sheet of the said date and were given a last chance also for the same on 29-9-2004. In compliance, the respondents submitted incomplete copy of the Customs Rules, 2001 regarding auction and relying on the provisions of Rule 71 thereof, contended that the emergent nature of the goods auctioned in this case, did not require issuance of notice under section 201 of the Act.

5. I have heard learned counsel for the appellant and D.R. assisted by Azam Khan, D.S. for the respondents both on merits and on the aforesaid application and have also perused the record of the case.

6. The plea of the appellant that the seized petrol was the same which was purchased in auction from the Customs authorities, D.I. Khan and was being transported to Lahore in Oil Tanker LSB-3545 which met an accident at Nowshera and thereafter, the petrol was shifted to the seized Vehicle No.PRN-9584, was not found sustainable as according to the Nowshera Police, the Oil Tanker No.LSB-3545 had met accident on 16-5-2002 which was empty and coming from Rawalpindi side. The seized goods being petrol, is non-notified item regarding which the Adjudicating Officer had the discretion to exercise his powers under section 181 of the Act of giving an option to the owner of the goods to pay fine in lieu of confiscation thereof. It is stated in the Order-in-Original that the Adjudicating Officer had taken lenient view in the matter while giving option to the rightful owner/driver of the vehicle to redeem the same on payment of fine but such leniency was not extended to the release of the petrol without mentioning any reason. Precedents are available such as in Appeal No. Cus. 320/PB of 2004 titled: Ahmad Gul v. Collector of Customs (Appeals), Peshawar etc. passed by this Tribunal in which foreign origin petrol was released on payment of duty and taxes.

7. So far the impugned Order-in-Appeal No.40 of 2002 passed by the Collector (Appeals) is concerned, this order pertained to a different case titled Wali Muhammad v. Deputy Collector of Customs, Peshawar relating to the seizure of foreign origin cloth etc. which was notified item vis-a-vis the petrol being non-notified item. Thus the impugned consolidated Order-in-Appeal could not be applied mutatis mutandis to the case of the appellant for having different facts and legal issues. The perusal of the said order would reveal that the Collector (Appeals) did not accept the appeal of the appellant for the reason that his forum could not allow relief to the appellant as the Adjudicating Officer, being the original officer, did not grant relief to him. For this view, he had relied upon the authority laid down by the Honourable Lahore High Court, Lahore in C.A. No.4 of 1998, dated 16-10-2001 reported as PTCL 2002 CL

92. It may be mentioned here that such view of the Collector (Appeals) has already been knocked down by the Honourable Peshawar High Court, Peshawar in S.A.O. No.8 of 2005, dated 1-4-2005 in view of the provisions laid down under section 194-B of the Act and it was held that as a general principle, an Appellate Authority had the same powers which were vested in the trial Judge of the Court. Moreover, the Central Board of Revenue has not precluded through any notification, the exercise of option to be given under section 181 of the Act in the case of foreign origin petrol, for being non-notified item. It may be added that the impugned Order-in-Appeal did not mention anything about the redemption fine imposed in respect of the vehicle in this case.

8. So far as the quantum of redemption fine imposed in lieu of the release of the vehicle is concerned, normally and by established practice such fine happens to be one sixth of the value of the goods. In this case it comes to be Rs.69167. The fine of Rs.75000 imposed in this case is, therefore, on the high side which is reduced to Rs. 69167. (Sixty Nine Thousand One Hundred Sixty Seven).

9. As regards the application, dated 15-9-2004 for the refund of sale proceeds, it is admitted position that no notice under section 201 of the Act has been issued to the appellant owner of the goods before auction thereof. The seizure of the auctioned goods took place for Rs.4,15,000 on 17-5-2002 and the petrol was disposed of in auction just on the second day on 18-5-2002, much before the issuance of Show-Cause Notice, dated 4-6-2002 and without any notice to the appellant owner of the goods. This haste in the disposal of goods indicates that the sample drawn from the petrol, was yet to be sent to the Officer Incharge of H. D.I. P. Petroleum Testing Laboratory, Peshawar for analytical test report.

10. The Customs Rules, 2001, which also provide for auction of the goods in Chapter- V therefore, make it mandatory under Rule 58 that soon the goods reach the stage of being sold under the Act, or required to be sold by auction, the Collector shall direct its sale by public auction, after giving due notice to the owner under relevant provisions of the Act. These rules provide also for certain goods which are not to be put to auction but are to be sold or disposed of in the manner as prescribed by the Central Board of Revenue. However, such goods do not include petrol. Thus even according to the aforesaid rules, issuance of notice was mandatory under section 201 of the Act as the goods in this case were auctioned by the respondents in exercise of their powers laid down under section 169 of the Act which provide, inter alia, for sale of seized goods pending adjudication of a case in accordance with the provisions of section 201 ibid.

11. The provisions of section 201 of the Act provide for sale of goods "other than confiscated goods" and application of sale proceeds. The pre-requisite for the sale of goods is the issuance of due notice to the owner of the goods. This notice is also mandatory prior to the sale of things under section 169 of the Act. Such notice shall be served through registered post as required under section 215 of the Act. It may be mentioned here that where such notice was not given, the sale proceeds were awarded to the owner of the goods by the Hon'ble Peshawar High Court, Peshawar in case vide S.A.O. No. 25 of 2002 decided on 18-3-2003, titled Nowsherawan v. Collector of Customs, Peshawar despite the fact that the goods had been outrightly confiscated. The decision was maintained by the Hon'ble Supreme Court of Pakistan vide Civil Petition No.397-P of 2003 decided on 4-5-2004 with modification to the extent that the payment of sale proceeds was restricted to the value of the goods involved.

12. Thus relying on the aforesaid authority of the Honourable Peshawar High Court, Peshawar coupled with the fact that the seized goods were non-notified item and so could be released under section 181 of the Act, both the impugned Order-in-Original as well as the Order-in Appeal be considered modified to the extent of providing release of the petrol in this case against payment of duty and taxes with fine @ 25% of its value. Since the petrol has been auctioned in violation of the provisions of section 201(1), read with section 169 of the Act, it is ordered that the sale proceeds of the auctioned goods shall be refunded to the appellant owner of the goods in accordance with the provisions of section 201(2) & (3) of the Act. This appeal stands disposed of accordingly.

13. Announced. C. M. A. /507/Tax(Trib. )???????????????????????????????????????????????????????????????????? Order accordingly.