P L D 1986 Karachi 28 (PLP)

Officers Areas

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Collector of Central Commissioner's Divisions of Hyderabad, Excise, Hyderabad. Khairpur, Quetta a d Kalat, Bahawalpur and the Districts of Muzaffargarh, Dera Ghazi Khan and Multan of Multan Division. Collector of Central Excise, Areas comprising the former province Lahore. of Punjab excluding the Commissioner's Division Bahawalpur and the Districts of Muzaffargarh, Dera Ghazi Khan and Multan of Multan Division. However, no such notification under the Land Customs Act, 1924 (XIX of 1924) in relation to area outside the Karachi Port Area and for the District or Division of Karachi has been brought to our notice nor have we been able to notice any such notification.

23. It has, however, been brought to our notice that by another Notification No. S. R. O. 446 (1)/74, dated 4‑4‑1974, in exercise of powers conferred by the proviso to section 4 of the Customs Act, 1969, the Central Board of Revenue ordered that the powers and duties to be exercised and performed by the Collector of Customs (Preventive) in relations to the Customs Stations in Karachi shall be limited to the following namely :‑ "(1) Preventive Organization at Customs‑Sea Port, Karachi, and at Keti Bunder, Shah Bunder, Sokhi ‑ Bunder, Port Muhammad Bin Qasim, Bram Hyderi, Giddani, Sonmiani and Ormara. (2) Customs Airport, Karachi. (3) Postal Appraisement Department. (4) Export Appraisement. (5) Drawback, Rebates and Refunds. (6) Sale of Goods, abandoned or confiscated. (7) Adjudication of cases relating to the matters aforesaid."

24. It is, therefore, clear from the above notification that neither the I Collector of Customs nor any other officer could have jurisdiction beyond,) their territorial jurisdiction to search and seize the goods. However, on‑1, February 12, 1983, another notification being S. R. O. 95 (1)/83, was issued, whereby the Central Board of Revenue remedied the situation by appointing the officers mentioned below for the areas noted against their names. SCHEDULE

Officers Area

1 2

Collectors of Customs, The division of Karachi, in the Pro Custom House, vince of Sind and the District of Karachi. Lasbella except Ormara in the Pro vince of Baluchistan, including the following: (i) the ports of Karachi, Keti Bun der, Shah Bunder, Sokhi Bunder, Port Muhammad Bin Qasim, Biam Hyderi, Giddani and Sonmiani ; and (ii) the Customs ‑ airport (Civil) Karachi, Shahre Shah Faisal Air base, Karachi, Masroor Airbase, Mauripur." Thus, it will be seen that the Collector of Customs is appointed to be the Collector of Customs for the entire area of Karachi Division and the District of Lasbella excepting Ormara in the Province of Baluchistan', including the Ports of Karachi, etc., and Customs‑Airport (Civil) Karachi, Shahre Shah Faisal Airbase, Karachi Masroor Airbase, Mauripur.

25. No other notification has been relied upon in the impugned orders nor has any been brought to our notice except the one mentioned above whereby the entire Karachi was declared to be port area. However, with reference to the provisions of section 163(1) of the Customs Act. 1969, it was argued by Mr. Sved Inayat Ali that the Customs Officers could seize the goods sold or kept' in any place and Mr. Syed Inayat Ali laid much emphasis on the word any place in section 163 (1) of the Act which we may immediately reproduce herein below "

163. Power to search and arrest without warrant.‑(1) Whenever any Officer of Customs not below the rank of an Assistant Collector of Customs or any other officer of like rank duly employed for the prevention of smuggling has reasonable grounds for believing that any goods liable to confiscation or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act are concealed or kept in any place and that there is a danger that they may be removed before a search can be effected under section 162, he may, after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place."

26. In our opinion the word "any place" has to be confined to a place within their jurisdiction and not any place beyond their jurisdiction for a Customs officer posted at Karachi could not seize the goods in any other country or in any other province unless he was so authorised by law, In the present case the Customs Officers had jurisdiction to seize the goods from any place within their territorial jurisdiction and, if their jurisdiction was at the relevant time, confined to the Port of Karachi and other areas, notified then they could not lawfully search or seize the goods from places which were beyond their territorial jurisdiction. We may repeat that no other notifications have been brought to our notice except Notification No. 53, dated 2‑10‑1953, as modified by the Notifications Nos. S. R. O. 167 (R)/67, dated 1‑9‑1967, and S. R. O. 446 (1)/74, dated 4‑4‑1974. But these notifications as already shown, are limited in their scope. Therefore, we find substance in the first point.

27. Now, taking up the second point that the said search and seizure. were illegal, it may be stated that iii order to carry out search without warrant the Customs Officer should have firstly, reasonable grounds for believing that (a) any‑ goods liable to confiscation or any document is or things for which information will be useful for or relevant to any proceedings under the Act are kept in any place, and (b) that there is danger that they may be removed before a search warrant could be effected under the provisions of section 162 of the Act, secondly, he should prepare a statement in writing of the grounds of his belief on both the points men tioned above.

28. It is urged on behalf of the petitioner by his learned counsel that firstly conditions Nos. 1 and 2 mentioned above were not fulfilled inasmuch as the grounds of belief on both the points were not stated. In order to appreciate this contention it will be convenient to reproduce for future reference the statement under section 163 of the Act alleged to have been delivered by the Assistant Collector of Customs (Preventive) which reads as follows :‑ "Whereas credible information has been placed before me that foreign smuggled refined tin slabs and other contraband foods are stored in the premises of M/s. Ittehad Re‑Rolling Mills, I; 10‑C Block

21. Federal `B' Area, Karachi, it is not expedient to obtain a search warrant as required under section 162 of the Customs Act. 1969 as the goods may be removed from the premises.

1. Afzal Ameer Khan, Assistant Collector of Customs (Preventive) under the powers conferred under section 163 of the Customs Act, 1969 order the search of the said premises."

29. Now, it is clear from the above statement that there is no mention that there was any danger of immediate removal of the goods for what is said in it is not expedient to obtain a search warrant as the goods may beg removed. This statement in our opinion, was not sufficient for searching the premises without warrant. The requirement of law is that the officers of Customs searching a premises without warrant should have reasonable grounds for believing that (a) any goods liable to confiscation or other documents and things are concealed or kept in a place and that (b) there is a danger (underlined for emphasis) that the goods may be removed ands then he should prepare a statement in writing recording the grounds of his belief. Now, nothing has been said in the statement about the grounds of belief that there was any danger that the goods might be removed. The respondents have not even filed any counter‑affidavit disclosing the grounds. Thus we are of the view that one of the necessary condition to carry out search was not satisfied. We must emphasis that before any officer of Customs carries out search without warrant he must fulfil the conditions as these conditions have been provided by the Legislature as a safeguard[" against mala file interference with the rights of citizen, in respect of property and against violation of right of privacy.

30. A similar notice under section 172 (A) of the Sea Customs Act 1878, served on S. M. Yousuf came up for consideration of this Court in S. M. Yousuf v. Collector of Customs (P L D 1968 Kar. 599). We may here reproduce the notice from the judgment and it reads :‑ "Notice for search under section 172 (A) of the Sea Customs Act.‑ Whereas credible information has been received that certain docu ments/prohibited and restricted goods/gold bullion, forged to effect illicit import of foreign goods have been prepared and secreted in ...the premises known as ...and whereas it is not expedient to take a search warrant, the said premises are being searched under section 172 (A) of the Sea Customs Act, after serving this notice on you." This notice was not held to be not in conformity with law and was, there fore, declared to be illegal. The arguments in this regard have been noticed in paragraph 9 of the judgment of Anwarul Haq. J. (as the learned Judge then was), we may reproduce the same here in below :‑ "9.‑The case for the petitioners is that none of the requirements prescribed by section 172 (A) of the Act were complied with by the Customs officials, as there were no reasonable grounds for the belief mentioned in the section, nor was any written statement of such grounds of belief prepared by the officials concerned before embark ing on these searches, and no copy of the required statement was sup plied to the petitioners at the time of the search; nor was any such copy delivered to them after the search. On behalf of the respon dents Mr. Shah Jamil Alam submitted that reasonable grounds were available to the Collector of Customs and his subordinate Officers for believing that smuggled goods were concealed or kept in the place belonging to the petitioners, and that these goods would be removed before a search could be effected under the provisions of section 172; and that the notice under section 172 (A) of the Act prepared and signed by the Customs Officers before commencing the searches was in the nature of the written statement envisaged by the section. It was further submitted by Mr. Shah Jamil Alam that the failure of the official concerned to deliver a signed copy to the occupier of the premises at his last known address was really not germane to the legality of the search, and was only in the nature of something which had to be done after the event. The learned counsel for the respondents further contended that, in any case, the omissions pointed out on behalf of the petitioners amount to mere irregularities which would not vitiate the search, as the power to search without warrant was not dependent on the recording of the statement of the grounds of his belief by the Customs official, but arose from the statutory recognition of the necessity to search with out warrant in certain situations calling for immediate preventive action". Considering the arguments of the learned counsel for the petitioner it was observed in paragraph 15 of the judgment as follows "15‑The petitioners are. however, on firmer ground when they contend that the second requirement contained in section 172 (A) to the effect that the Customs Officer shall prepare a statement in writ ing of the grounds of his belief, has not been complied with in these cases. As already pointed out, the only document available in these cases is the so‑called notice under section 172 (A) of the Act. I am clear in my mind that this notice falls far short of the relevant requirement laid down by the statute. In the first place, this is a cyclostyled and stereotyped document merely stating that credible information has been received . thus showing beyond doubt that the Customs Officer concerned did not apply his mind to each individual case. The notices were already available at the Customs House and they were filed in at the spot by the officer con cerned before commencing the search of a particular premises. In many cases they had already been signed by officers who neither searched the premises, nor caused the search to be made‑ Such a procedure can hardly satisfy the requirement of the law that before embarking upon a search without warrant the Customs Officer shall prepare a statement in writing of the grounds of his belief that smuggled goods are concealed or kept in any place and that there is a danger that they may be removed before a search can be effected under the provisions of section 172 of the Act. The law further requires that the statement must also mention the goods for which the search is to be made. These are stringent requirements prescri bed by law in order to ensure that the enormous power of search without warrant given to Customs Officers is exercised honestly and judiciously. By insisting that the grounds for his belief shall be recorded before hand by the Customs Officers concerned the law seeks to ensure that the search without warrant is made for a bona fide purpose and on reasonable grounds which can be tested later, if challenged by the aggrieved party. To put in differently, in seems to me that this is a safeguard prescribed by the Legislature to ensure that the rights of the citizen in respect of private property are interfered with only for genuine reasons related to the preven tion of smuggling and evasion of Customs duty, etc. This safeguard can be effective only if the procedure prescribed by law is faith fully and honestly followed by application of mind in each individual case. The notice relied upon by the Customs Authorities does not fulfil these requirements."

31. The condition required to be fulfilled under section 172(A) of the Customs Act, 1878 also came up for consideration in the case of Muza .Anwar Baig v. Nazir Azhar and 4 others (P L D 1979 Kar. 687). Considering and analy sing the same it was observed in paragraph 4 of the report as follows: "From the above decision it will follow that the respondents were bound to disclose in their counter‑affidavit the grounds on which they promised their belief that specified smuggled goods had been stored in a particular place and that there were grounds to believe that it immediate action is not taken under section 172‑A the gods will be removed. The respondent's case has been stated in the aforesaid paragraph 2 of the counter‑affidavit and it is obvious that the paragraph does not disclose the material upon which the satis faction of the respondent was founded at least as to the latter requirement, namely, that there were grounds to believe that the goods would be removed unless immediate action was taken with out a warrant from a Magistrate under section 172 of the Sea Customs Act. In this connection we may also refer to the case of S. M. Yousuf v. Collector of Customs and others in which also an action under section 172‑A was under attack and the view that found favour was that it is within our jurisdiction to ascertain the material available to the relevant authorities which could furnish reasonable grounds for believing that action under section 172‑A of the Act was called for and what was to be adjudicated upon was the reasonableness thereof. In the present case, as aforesaid no material has been disclosed which warranted action under section 172‑A of the Sea Customs Act against the petitioners for the only ground disclosed is that if action under section 172‑A is not taken the goods will be removed." And consequently, the orders were set aside.

32. We may also refer to Shaukat Hussain v. Zulfiqar Ahmed and others (P L D 1981 Lah. 13) wherein search and seizure was carried out in the presence of a Magistrate but without search warrant under section 163 of the Act. It was urged that the search and seizure were vitiated by non‑compliance of the provisions of sections 162, 163 and 171 of the :Act. On behalf of the respondent, it was urged that since the Magistrate was present at the spot and smuggled goods were produced no warrant was required. Dealing with the contention it was observed by M. S. H. Qureshi, J., in paragraphs 3 and 4 of the report as follows "(3) Section 162 of the Customs Act empowers a Magistrate to issue search warrant on an application by a gazetted officer of Customs. Under section 163, subsection (1), an `officer of Customs not below the rank of an Assistant Collector of Custom' or `any other officer. of like rank duly employed for the prevention of smug gling', if he has reason to believe that any goods liable to confiscation under the Act are concealed or kept in any place and there is a danger that the same may be removed before a search can be affected under section 162, may `after preparing a statement in writing of grounds of his belief and of goods' for which search is to be made, search or cause search to be made for such goods in that place. The officer who makes the search or causes the search to be made, is further required by subsection (2) to leave a signed copy of the aforementioned statement in or about the place searched and at the time of the search or as soon as practicable thereafter to deliver, furthermore, a signed copy of such statement to the occupier of the place at his last known address. Subsection (3) of section 163 directs that all searches made under this section shall be carried out mutatis mutandis in accordance with the provisions of the Criminal Procedure Code. Section 171 requires that when anything is siezed, the officer making such seizure shall, as soon as may be, inform in writing the person from whose possession the things are seized, of the grounds of such seizure or arrest." "(4) The contention that there was no search involved is not correct because the act of entering upon the shop premises with a view to finding out if it contained any smuggled cloth and if so to seizing it, did constitute search. From the F. I. Rs. in both the cases and the written statements filed, it appears that the raid had been organized and conducted on the basis of an information that the petitioners had stock of foreign cloth in their shops. However, there is no mention in the F. I. Rs. nor is it the case of the respon dents that any attempt had been made to obtain a search warrant from the Magistrate as required under section 162 of the Customs Act, or a statement as required under section 163 (1) of that Act had been prepared in writing of the grounds of the raiding officer's belief that goods liable to confiscation were concealed in the shops and that there was a danger that the same might be removed before a search warrant could be obtained, it is also not the case of the respondents that the raiding officer had, after the seizure, informed in writing the petitioners of the grounds of the seizure as required under sections 163 (3) and 171 of the Act. It is, therefore, clear that there had been no compliance of the provisions of sections 162, 163 (1) and (2) and 171 of the Customs Act."

33. We, therefore, are of the opinion that search and seizure of the goods were illegal for non‑compliance of the provisions of sections 162 and 163 of the Act. We, therefore, hold accordingly.

34. As regards the third point that no notice under section 172 of the Act was served, we may state that a copy of the notice has been produced which bears the signature of Yaseen Baig who was then the manager of petitioner, in token of having received the original. It was urged by the learned counsel for the petitioner that only signature of Yaseen were obtained on the seizure receipt but we cannot go into this question as it would require evidence. We, therefore, reject this point.

35. As regards the point that the burden of proving that the goods were unlawfully imported was on the Customs Authorities as tin ingots was not a notified item under section 156 (2) of the Act, it is admitted that it is not one of the notified item. In reply it is. however, submitted by Mr. Syed Inayat Ali that the burden of proving that the goods were law fully imported under section 187 of the Act was on the petitioner. We may here reproduce the provisions of sections 156 (2) and 187 of the Act which read as follows "156 (2).‑Where currency, gold, silver, precious stones ornaments or other manufactures of gold, silver or precious stones, or any other goods which the Federal Government may, by notification in the official Gazette, specify are seized under this Act in the reasonable belief that an act to defraud the Government of any duty payable thereon or to evade. any prohibition or restriction for the time being in force by or under this Act has been committed in respect of such goods, or that there is intent to commit such act, the burden of proving that no such act has been committed or there was no such intent shall be on the person from whose possession the goods were seized." Section 187.‑Burden of proof as to lawful authority, etc.‑When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, licence or other document prescribed by or under any law for the time being in force, the burden of proving that he had such authority permit, licence, or other document shall lie on him.".

36. The distinction between section 187 and subsection (2) of section 156 of the Act has been succintly brought out by Mr. Justice (Retd.) Z. A. Channa in his book entitled `General Manual of Customs Laws' at page 689 and we may reproduce the same here. "Distinction between this section and subsection (2) of section

156. Both subsection (2) of section 156 and this section place the burden of proof on the person found in possession of goods or doing any specified acts. The scope of the two provisions, however, is vastly different, though there would obviously be a certain amount of overlapping. (1) The application of subsection (2) of section 156 is strictly limited, to goods. (i) specified in clause (s) of section 2 or in a notification issued thereunder, i.e., smuggled goods ; and (ii) which have been seized in the reasonable belief :‑ (a) that an act to defraud the Government of any duty payable on such goods or to evade any prohibition or restriction inforce by or under this Act has been committed in respect such goods; or (b) that there is an intent to commit such an Act. The following three circumstances must, therefore, co‑exist in order that the provisions of subsection (2) of section 156 (2) can be attracted :‑ (1) There must be a lawful seizure of goods by an authorised officer. (2) Such goods should be smuggled goods, i. e., falling within the definition of `smuggle' as given in section 2 (s). (3) The seizure should be in the reasonable belief ‑ (a) that an act to defraud the Government of any duty payable on such goods or to evade any prohibition or restriction imposed by or under this Act in respect of such goods has been committed; or (b) that there is intent to commit any such act. On the other hand the scope of this section (187) is much wider and more general. The twin requirements for its application are (i) A person should allegedly have committed an offence. (ii) A question should arise whether he did an act or was in possession of anything with lawful authority or under a permit, licence or other document required by law. This section 187 therefore, is applicable both to possession of any goods as well as to doing of acts, so long as the possession of such goods or the doing of the thing is required to be under a lawful authority or a licence, permit, or other prescribed document."

37. The observations of the appellate authority in paragraphs 5 and 6 of the order, dated 22‑9‑1981, are as follows "

5. Another plea of the learned consultant is that the possibility of the appellant not being aware about the payment of duty on the goods cannot be ruled out because, according to the Customs own findings, the goods were sold to the appellant by Lala Khan and also because such goods are openly importable on Free List. In this connection he has invited attention to a judgment of the High Court of Sind in the case of Barkat Ali and others v. the State P L D 1973 Kar. 659 and has quoted paragraph 11 of the judgment which is as under : 'When the law raises a presumption against the accused and calls upon him to prove the contrary. It is well‑settled that the contrary can be said to be proved if the accused succeeds in establishing that the act attributed to him is capable of an interpretation other than suggested by the prosecution.' This ruling of the High Court is not relevant to this case because during the course of search of the factory certain stenciled tin plates were found with inscription of different trade marking which revealed that these plates were being clandestinely used to imitate and fabricate the marking of legally imported goods in order to give a cover of genuineness and legality to the non-duty paid smuggled goods. The markings of port Khomeiny in Iran were also found on some of the slabs. These important pieces of corroboratory evidence further go to prove that the appellant was actively involved in fraudulent evasion of customs duty chargeable on the goods recovered from him. (6) Finally, the pleas of the learned consultant that the goods in question are importable on free list and that the appellant himself is not responsible for their smuggling into Pakistan are, however, correct." Since part of the goods had markings of foreign origin namely Port Khomeiny in Iran and though the goods were importable on free list but custom duty was payable thereon, therefore, the burden of proving that those goods were lawfully imported and duty was paid thereon was on the petitioner, which he failed to discharge. Therefore. this point has no substance

38. As regards the last point that no action was taken against Lala Khan who supplied the goods to the petitioner although a show‑cause notice was issued to him, it may be stated that the petitioner can succeed or fail on strength of his own case not on the basis of non action against .Lala Khan. Surely, the appellate customs authority took into consideration the pleas raised on behalf of the appellant before him that the goods were sold to the appellant by Lala Khan and were importable on free list and that the appel lant himself was not responsible for the* smuggling into Pakistan when it reduced the amount of the penalty from Rs. 2,50,000 to Rs. 1,50,000.

39. We, therefore, declare that the search and seizure of the goods were without lawful authority and the orders impugned in this case are not in accordance with law and, therefore, of no legal effect. However, in the circumstances of the case we leave the parties to bear their own costs. M. B. A. Order accordingly.