1969 PLP 708 (SCMR)

HAMOODUR RAHMAN, J.‑This appeal by special leave is by the Collector of Central Excise and Land Customs, Chittagong against the judgment and order of a Division Bench of the High Court, East Pakistan in a petition under Article 98 of the Constitution whereby an order of the Deputy Collector, Central Excise and Land Customs imposing a penalty of Rs. 1000 and confiscating 22 bags and 11 bundles of biri leaves under section 167(8) and (9‑B) of the Sea Customs Act was declared to have been made without lawful authority and quashed. The circumstances in which the above‑mentioned penalty came to be imposed may be briefly stated as follows:‑ "The respondent was granted an import licence during the shipping period July to December, 1962, for the import of biri leaves of the value of Rs. 6,

000. On the basis of this import licence the respondent entered into a contract with M/s. Mohanlal Gordhanbhai & Company of Calcutta for the purchase of biri leaves of Rairangpur brand, 3rd grade of Orissa State crop 1962, at the rate of Rs. 55 (Indian) C. I. F. per bag, each containing 12 bundles. The Calcutta vendor thereafter sent 2 pro forma invoices dated the 11th July, 1962, to the respondent; one was for 48 bags and 8 bundles valued at Rs. 2,676.72nP (Indian) and the other was for 60 bags valued at Rs. 3,300.00 (Indian). The total in voice value of 108 bags and 8 bundles came to Rs. 5,976.72nP (Indian) which was well within the limit of the import licence. On receipt of the said invoice the respondent directed his bankers, M/s. Habib Bank limited, Rangpur, to open a letter of credit in favour of his Calcutta vendor for the amount of the two invoices. This was done through the Chittagong Branch of the said bank on the 30th of July, 1962 and the vendor against the said letter of credit despatch ed by rail from Calcutta 2 consignments of biri leaves of the stipulated quantity under two railway receipts Nos. A‑04885 and A‑048860, dated the 15th October 1962, for delivery at Santahar." On the arrival of the consignments at Santahar the respondent on the 13th November, 1962, filed two import applications with the Santahar Land Customs Authorities in respect of the said consignments declaring the value thereof to be Rs. 5,976.72nP (Indian) at the rate of Rs. 55 (Indian) per bag. The land Customs Officer, Santahar, relying upon a proforma of wholesale biri leave rates circulated by the Collector of Central Excise and Land Customs, West Zone, to all Subordinate Land Customs Authorities, for their information and guidance; being Circular C. No. V/23 (3)‑Cus And 62 or 8011‑20, dated the 28th July, 1962; took the view that there was a mis‑declaration of value. According to this circular the market rate of biri leaves of the quality imported by the respondent were on the 21st of July, 1962, Rs. 70 per bag of 12 bundles each. The consignments were accordingly seized but on the application of the respondent 85 bags and 9 bundles were subsequently released on the 21st of November 1962, on payment of the duties and sales tax on the value declared by the respondent. The remain ing 22 bags and 11 bundles were, however, kept under seizure subject to the orders of the superior Land Customs authorities. Thereafter, on the 11th/13th April 1963, the Deputy Collector, Central Excise and Land Customs, Rajshahi, caused a show‑cause notice to be served upon the respondent to show cause within 14 days as to why the excess goods imported by him should not be forfeited to Government and penal action taken against him for mis-declaration of value and importa tion of goods in excess of the import licence. The charge against him was (i) that he had by mis-dec laring the value to the extent of lcs. 1,770.28 paisas violated the provisions of section 39 of the Sea Customs Act and committed an offence punishable under section 167 (9‑B) there of, and (ii) that by importing biri leaves of the value of Rs. 7,607.00 he had imported goods in excess of the licence value by Rs. 1,770.28 paisas and thereby violated section 19 of the Sea Customs Act read with section 3 (3) of the Imports and Exports (Control) Act, 1950, and committed offences punish able under section 7 of the Land Customs Act read with section 167 (8) of the Sea Customs Act. The respondent showed cause and contended that the valua tion determined by the department was based on no evidence but on mere hypothesis, and was in any event of an inconclusive character. The respondent also relied upon the decision of this Court in the case of Eastern Rice Syndicate v. Central Board of Revenue (P L D 1959 S C (Pak.) 369) in support of his contention that a violation of the provisions of section 39 of the Sea Customs Act could not be found on such an inconclusive and indefinite valuation, for it in no way, established that the declaration of value was false to the knowledge of the maker thereof or in any sense an untrue declaration of value. The respondent claimed that the value declared by him was the `normal value' as defined in section 30 of the Sea Customs Act and relied upon the certificate granted by the Secretary, Oriental Chamber of Commerce, Calcutta to show that the invoice value was the correct value of the contract between him and his vendor. The Deputy Collector, however, took the view that this explanation was unacceptable, for, the rate of biri leaves of the quality purchased by him on 30‑7‑62, the date of the opening of the letter of credit, was Rs. 70 per bag as evidenced by the circular sent out by the Collector on the 28th of July 1962. He, therefore, found him guilty under both sections 167(9‑B) and 167 (8) of the Sea Customs Act and imposed a penalty of Rs. 1,770 as also confiscated the seized goods without any option to the respondent to have them released. The respondent then went up in appeal to the Collector but the findings of the Deputy Collector were upheld and the appeal was dismissed. A revision to the Central Board of Revenue, Islamabad, resulted only in the reduction of the penalty from Rs. 1,770 to Rs. 1,

900. The rest of the order was not disturbed. Being aggrieved by these orders' the respondent moved the High Court of East Pakistan under Article 98 of the Constitu tion. His contentions found favour with the High Court and the orders of the Customs Authorities were quashed. The High Court, relying on the decision of this Court in the case of Messrs Eastern Rice Syndicate, took the view that "the essence of an offence under section 39 is that the offender has obtained an advantage at the hands of the Customs Authorities or has induced them to take some form of action by making a statement which is untrue in any material part." Untrue, it was further held, carried "the sense of falsity to the knowledge of the person concerned." In the present case, it was held that this element of falsity had not been brought home to the respondent by the department, as the only basis for coming to this conclusion was the circular sent out by the Collector on the 25th of July, 1962. This, in its turn, was based upon some information supplied by the Deputy High Commissioner of Pakistan in Calcutta on the 23rd of July, 1962, when his office forwarded to the Collector in answer to his queries a proforma containing "the average wholesale rates of biri leaves as prevalent on the 21 st of July, 1962, in the Calcutta market." This did not disclose how or on what basis the average wholesale rate of biri leaves quoted in the proforma had been worked out or the source from which the informa tion was obtained. The High Court, therefore, took the view that this document was not by itself sufficient to indicate that the respondent knew that the price was not Rs. 55 per bag as declared by him but was, in fact, Rs.

70. On this finding the conviction under section 167 (9‑B) for the alleged violation of the provisions of section 39 was set aside but curiously enough the conviction under section 167(8) was not interfered with, even though it purported to have been based on the same evidence, as it was felt that in a proceed ing under Article 98 of the Constitution it was not open to the High Court "to express any opinion with regard to the sufficiency" thereof. The order imposing the penalty and confisca tion was, however, quashed, as it was a combined punishment for both offences. Leave was granted in this case to re‑consider the order of the High Court on account of the above conflicting conclusions. The first point now raised on behalf of the Collector of Central Excise and Land Customs, in support of this appeal is that the High Court had no jurisdiction to interfere under Article 98 of the Constitution with an order passed by the Central Board of Revenue, as the act complained of was in effect the act of the Central Board of Revenue which functioned at Islamabad outside the province in which the High Court functioned. It could not, therefore, be said that the act done or proceeding taken, which was declared to have been done or taken without lawful authority by the High Court of East Pakistan was done or taken in that Province. This argument is based upon the assumption that the order of the Deputy Collector, Land Customs and Central Excise, Rangpur, which initially imposed the penalty and ordered the" confiscation as also the appellate order of the Collector at Chittagong, merged in the order of the Central Board oft Revenue. . This is, however, an incorrect assumption, for iT overlooks the fact that the proceeding taken before the Central Board of Revenue was by way of a revision only and not by way of an appeal. It is no doubt true that in the case of an appellate order modifying the original order the original order merges in the appellate order, but this is not always so in the case of a revision. The revisional jurisdiction under the Sea Customs Act is not as extensive as the appellate jurisdiction and the doctrine of merger is not, in our view, attracted to the case of such a revision. The order, even if revised or modified in such a proceeding still remains the order of the appellate authority, namely, the Collector, who confirmed the order of the Deputy Collector. Both these officers acted within the province and, therefore, the High Court had every jurisdiction to interfere with their acts or omissions under Article 98 of the Constitution if such acts or omissions were without lawful authority. As regards the merits of the case it is contended on behalf of the Collector that the decision of this Court in the case of Messrs Eastern Rice Syndicate had been misapplied by the High Court, for in the facts of the present case it was clear that the Customs Authorities had followed the principles there in laid 'down by this Court and before finding the respondent.. guilty the department had duly established "by furnishing proof of the prevailing commercial price in the country of origin at the time of the import" that the value declared was false. The data relied upon was gathered from an authentic source, namely, the office of the Deputy High Commissioner at Calcutta, and it clearly showed that the prevailing market rate in the country of origin was much above that declared by the respondent. The department, it is said, had also given the respondent the fullest opportunity of producing evidence in rebuttal, considered that evidence and given the respondent a full hearing in the matter. In the circumstances, the authorities had, it is contended, not only acted in accordance with law but also in accordance with the principles of natural justice. The High Court should not therefore, have interfered merely because it took a different view as to the weight to be attached to that evidence. The departmental evidence, as already pointed out, was a proforma of the average wholesale rates said to be prevalent on the 21st of July, 1962, in the Calcutta market which was sent by the office of the Deputy High Commissioner at Calcutta. Neither the proforma nor its covering letter states how and from what source these rates were obtained. It is not known if they were the rates quoted on the wholesale biri market or on what basis the averages had been worked out. The rates given in the proforma were for the 21st of July, 1962, whereas the contract was entered into on the 11th of July, 1962, and the letter of credit was opened on the 30th of July, 1962. The question is, therefore raised as to whether the rates for the 21st of July, 1962, could be treated as having conclusively fixed the rates prevailing upon any of the dates relevant for the purposes of this case. Could it form the criterion for even determining the market rates prevailing on the dates that the goods were actually despatched from Calcutta on the 15th of August, 1962? A careful examination of the proforma further discloses certain inherent inaccuracies which cast a grave doubt as to the correctness of the figures given therein. According to this proforma the price for the quality of biri leaves imported, namely, Rairangpur, per bag of 24 bundles weighing 95 killograms is Rs. 180 for Grade I, Rs. 170 for Grade II and Rs. 160 for Grade III, but curiously enough the price quoted for a bag of 12 bundles, weighing 56 killograms is Rs. 80, Rs.75 and Rs. 70 respectively for corresponding grades. This can hardly be so, for in this event more than half of a bag of 24 bundle weighing 95 killograms, will be available at much less than half of the rates quoted for the larger quantity. Again it is not understood as to why a bag cantaining 12 bundles should weigh more than half of 95 killograms. The market rates given in the proforma display such a state of confusion that it is inconceivable that they can have any relation to the normai commercial practice of a market. Surely no one in this stage of the market rates would purchase a bag of 24 bundle weighing 95 killograms when he can purchase more than that quantity, namely, two bags containing 12 bundles each ana C weighing in all 112 killograms for Rs. 160, Rs. 150 and Rs. 14 as against the quoted rate of Rs. 180, Rs. 170 and Rs. 16 for the larger bag (containing 24 bundles but weighing only 95 Killograms). The proforma is, therefore, on the face a it not an authentic document on which any reliance can at all be placed. In this state of affairs the conviction of the respondent, as has been rightly held by the High Court was one which can well be described as having been based upon no evidence at all. The department cannot, therefore, claim that the res pondent had either made an untrue statement knowing the same to be false or that he had imported goods in excess of the amount of the import licence. The valuation put by the Customs Authorities was clearly arbitrary and fanciful being based on no evidence at all. The department's contention that the evidence produced by the respondent was equally unreliable, for the certificate on the Oriental Chamber of Commerce only certified the origin of the goods and not the price thereof cannot be of any assistance to it, for it must be remembered that it was not for the respondent to establish that he had made a true statement but the onus was entirely on the department to establish that the respondent had given an untrue declaration of the value. The weakness of the respondent's evidence could not establish the department's case nor could the department presume that because the evidence produced by the respondent was unreliable its own guess was more accurate. If the goods were, as in the present case, of a type which had a market of its own in the country of its origin we fail to understand why the office of the Deputy High Commis sioner could not have obtained the official market rates prepared by some recognised trade aassociation and then certi fied the same to be the authentic rates complied by the said association in respect of that commodity for over a period. At any rate, we see no reason why the office of the Deputy High Commissioner could not have disclosed the source from which the rates mentioned in the proforma were obtained, or as to bow the averages were prepared. In the facts of this case we have no manner of doubt that this case was fully covered by the principles laid down by this Court in the case of Messrs Eastern Rice Syndicate, where too the offences charged were, as in this case, under sections 167 (8) and (9‑B) for violations of sections 19 and 39 of the Sea Customs Act. For the reasons given above we are of the opinion that the conviction of the respondent under both the above‑mention ed sections must be set aside. If there was no untrue declara tion of value then there was also no excess import. If the conviction under section 167 (9‑B) is found to have been based on no evidence then it is diffcult to appreciate how it can be said that in the case of the second conviction under section 167 (b) the question is only one of suffciency of evidence. This conclusion of the High Court is clearly self‑contradictory and not sustainable. However, since the High Court has quashed the entire order imposing the penalty and the confiscation it will be suffcient to say that with the above observation this appeal is dismissed with costs. Appeal dismissed.