2010 PLP (Trib (PTD)

MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL-II).

This order will dispose of Customs Appeal Noll 185/2009 filed by the Appellant against Order-in-Appeal No.03/2009, dated 11-3-2009 passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals), Hyderabad.

2. Brief facts of the case are that on information the staff of Special Anti Smuggling Squad, Hyderabad seized an oil tanker bearing Registration No. LCA-064 of Messrs Sialkot Karachi Goods Transport Company Karachi-Sialkot loaded with 24,000 liters foreign origin high speed diesel which led to recovery of foreign origin high speed diesel from front, middle and last chamber of the said oil tanker. The driver of the vehicle could not produce any lawful import for possession, therefore, the above foreign origin High Speed diesel oil along with the said oil tanker was detained in presence of two mushirs and proper detention memo. was issued. Further scrutiny revealed the following dispatch advices along with number plate of the oil tanker on which registration number TA-771 was mentioned were recovered beneath the driver's seat of the oil tanker. S.No. DISPATCH ADVICE NO WITH DATE OH TANKER REI NO DISPATCH ADVICE ISSUED BY 01 12338 dated 21-5-2008 TTA-771 Messrs Bosicor Pak Ltd. Hub 02 123339 dated 28-5-2008 TTA-771 Messrs Bosicor Pak Ltd. Hub 03 12340 dated 11-7-2008 LCA-064 Messrs Bosicor Pak Ltd. Hub It was further observed by the seizing agency that the above dispatch advices were sent to Messrs Bosicor Pakistan Limited Karachi for verification who vide letter dated September 1, 2008 confirmed that the said dispatch advices were "found bogus and fake".

3. That the said foreign origin high speed diesel was brought into country through un-authorized route and without payment of duty and taxes leviable thereon. Accordingly the same were seized under proper mushirnama after issuing notice under section 171 of the Customs Act, 1969, to the driver of said oil tanker with the direction to forward the same to the owner of the said foreign origin high speed diesel.

4. Since recovered goods were brought into the country through unauthorized route in violation of section 3(1) of Import and Export (Control) Act, 1950 and sections 2(s) and 16 of the Customs Act, 1969 the same were seized under section 168 of the Customs Act, 1969 for violation of section 3(1) of Import and Export (Control) Act, 1950 and sections 2(s) and 16 of the Customs Act, 1969 punishable under sections 156(1)(8) and (89) ibid and section 33 of the Sales Tax Act, 1990. A show cause notice was issued to the appellant as to why penal action under the aforesaid provisions of law should not be taken against them. The matter was adjudicated and the learned Deputy Collector of Customs Hyderabad passed the Order-in-Original No. 13 of 2008, dated 14-11-2008. The operative part of the aforesaid order contained in (para.25) is reproduced below:

"I have examined the case record and have given due consideration to the arguments made before me. Based on the aforementioned infirmities in the contention of the petitioners, I am inclined to hold that the petitioners have failed to rebut sufficient evidence on record to the effect that impugned Foreign Origin High Speed Diesel Oil had been brought into the country without payment of duty and taxes and it has been effectively provided by the Seizing Agency that the seized Diesel is smuggling one. I therefore, order that the seized goods i.e. 24,000 liters (aprox) of High Speed Diesel Oil is confiscated outright for contravening the provisions of sections 2(s) and 16 of the Customs Act, 1969 read with section 3(1) of Imports and Export (Control) Act 1950 and punishable under Clause (89) of section 156(1) of the Customs Act, 1969, the seized Oil Tanker bearing registration LCA-064 used for the transportation of the smuggled F/0 HSD oil is also ordered to be confiscated outright in terms of section 157(2) of the Customs Act, 1969."

5. The appellant preferred appeal against the aforesaid order before Collector (Appeals) Hyderabad who upheld the order-in-original and passed order-in-appeal. Hence this Appeal.

6. The clearing agent representing the appellant reiterated the arguments incorporated, in the memo. of appeal. He mainly argued on the following points: (i) That the seized oil tanker is a public carrier and transporting diesel/oil against payment of remuneration. It is owned by a Transport Company which hires oil tanker from the open market. The Truck Stand Owner issues three copies of bilty out of which one copy is handed over to the Driver, Oil tankers are generally hired by market brokers who are in association with the Transport Companies to conduct this business. The driver is generally an illiterate and uneducated person who receives documents from the transport company or the Truck Stand and is not able to verify as to whether the documents are fake, forged or genuine. (ii) That in this case the appellant No. 2, Mumtaz Ali is the driver and possession holder of the oil tanker and the oil tanker does not belong to the appellant. He prayed for the release of the oil tanker since the diesel which did not belong either to the driver or to the owner of the tanker has already been confiscated and sold by the respondent to CSD at exceptionally cheaper rates against prescribed procedure and rules.

7. The learned Deputy Collector supported the impugned orders. He mainly emphasized on the following points: (i) That the High Speed Diesel was smuggled as per report of CSD because it did not conform to the Pakistan Standard Specifications. (ii) That the owner was travelling with the driver while transporting High Speed Diesel and the diesel was in bulk quantity. In these cases the bulk quantity dispatch advices are issued by the Oil Marketing Companies and these oil tankers carrying aforesaid diesel in bulk quantities are duly calibrated tankers with three chambers. (iii) That the receipts issued are invariably in the form of three dispatch advices. The dispatch advices in the subject case were numbered as 12338, 12339 and 12340. The first two were dated 21-5-2008 and the last one dated 11-7-2008. The truck Number was TTA-771 at the time of the seizure. The extra Registration Plate was also recovered from the seized oil tanker which bore different registration numbers of both sides, one was TTA-771 and other was LCA-064. This amply demonstrates the mala fide intentions and ulterior motives of the truck owner/ driver and show that they were regularly indulging in the transportation of the smuggled oil. All three dispatch advices on investigation/ enquiry were found to be fake and bogus as such the owner/driver are habitual offenders indulging in the act of smuggling. (iv) The learned Deputy Collector further deposed that Advocate for the appellant during the hearing before the lower forum produced three dispatch advices of Pakistan State Oil issued in the name of Mian Enterprises Shirin Jinnah Colony. According to the learned Deputy Collector these advices are not relevant and have been produced as an afterthought. Moreover, these advices are for Light Speed Diesel while the subject goods are High Speed Diesel are sold to CSD and verified as such by them through their certificate placed on record.

8. This forum put the following queries to the learned Deputy Collector regarding the procedure followed by them for seizure confiscation and sale of the seized diesel as well as in respect of seized oil tanker:--

1. Does the seized oil tanker contain any concealed cavities?

2. Whether the seized oil tanker was seized within the municipal limits?

3. Whether the vouchers issued by the PSO were verified by the Collector?

4. Whether any representative samples were drawn by the

5. Collectorate in presence of the appellant or his duly authorized representative.

6. Whether the representative samples if drawn were sent for chemical analysis or chemical test?

7. Whether the request of the appellant for summary adjudication was acceded to by the competent authority?

9. The learned Deputy collector replied to the above queries as under:-- (1) That there were no hidden cavities in the oil tanker because such oil tankers are calibrated and have three Chambers. (2) That the sized diesel along oil tanker was not seized near border area but was seized within the municipal limits of Hyderabad. (3) That the vouchers were not verified by the Collectorate since the dispatch advices were found fake. (4&5) That no representative samples were drawn as such not sent to the Laboratory for chemical test. The Collectorate relied solely upon the report of the CSD Headquarter office Rawalpindi for verification of the foreign origin of the seized diesel. CSD Headquarter office Rawalpindi is an army affiliated organization and purchase diesel for official usage at Government approved rates. (5) That the request of the appellant for summary adjudication was not accepted by the adjudicating authority.

10. It is one of the principles now well-accepted that no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed

"that unless material was brought on record by customs staff to show that owner of the oil tanker was criminally linked with smugglers or had definite knowledge that goods to be transported were smuggled or that either of them was consciously assisting or furthering commission of offence of smuggling, prima facie presumption could not be to the effect that vehicle for transportation was being wilfully used in transportation of smuggled goods, the same was not liable for confiscation.

11. The appellant had picked the load against normal hire charges. Irrespective of the fact that the owner of the item was on board or not on board the oil tanker, he (the appellant) was neither the owner of the goods nor had any other material interest therein whatsoever. There was no act of connivance or abetment in the commission of offence either. In the circumstances, therefore, the seizure of his oil tanker and imposition of fine thereon was not warranted by law.

12. Not only the consignment was covered by proper Bilty, the appellant had produced to the seizing officer the documents available within him. It being the case, therefore, there did not exist a reasonable belief as to the status thereof within the meaning of section 168(1) of the Customs Act, 1969 to warrant seizure of the oil tanker.

13. The parties led evidence which are exhibited on record. The issue before the Tribunal is whether or not in the circumstances of the case, the charge of smuggling against the driver/possession holder of the oil tanker has been proved? While going through the evidence, it is observed that following facts are established: (i) That the goods were being brought to Karachi and were seized on the highway. (ii) That there were no hidden chambers or cavities in the oil tanker. (iii) That the driver was duly carrying with him the documents handed over to him by the transport company including the bilty of the consignment. (iv) That the checking by various agencies enroute was not verified nor admitted by the concerned authorities. (v) That the goods were to be of foreign origin on the strength of a certificate issued by CSD Headquarters Rawalpindi and also sold to CSD for official usage at prevalent official rates.

14. In this case, the confiscation of the diesel which was confiscated on the strength of the certificate issued by CSD Headquarters Rawalpindi has not been forcefully challenged by the appellant at any stage with authenticated documents. However, the appellant has vehemently contested the factual position that he being a transporter for hire had no direct role in transporting the subject diesel even if it was smuggled since he had no means to know as to whether the diesel was of foreign origin.

15. That in a similar case the Honourable High Court of Balochistan while deciding the reference application,No.60/2006 on 3-9-2007 in the case of Collector Customs Quetta v. Muhammad Younus regarding the confiscation of common carrier on the charge of smuggling has been pleased to observe as under:- "We have carefully considered the contentions put forth by the parties, learned counsel and have also gone through the impugned order as well as order passed by the Collector (Appeals). It may be noted that the Collector (Appeals) in his order concluded that the charge framed in the show cause notice that the foreign origin goods were to be smuggled from Quetta to Karachi is, however, not substantiated in view of ruling of superior Courts holding that it is only at the border of Pakistan that taking out or bring in would be an offence. After such conclusion there was no occasion for the Collector (Appeals) to have maintained confiscation of vehicle or direct for its release against the payment of redemption fine. Similarly the learned Tribunal relying upon the judgment of Honourable Supreme Court reported in 1995 SCMR 387 concluded that the confiscation of common carrier on the charge of transporting smuggled goods is not tenable unless a direct role of transporter is alleged and proved in smuggling which being finding of fact could not be disturbed while exercising jurisdiction under section 196 of the Customs Act, 1969 as no point of law is involved. For the foregoing reasons, in our considered view no point of law is involved in the instant reference which is dismissed accordingly."

16. In the light of above, it is proved that no act of smuggling within the meaning of section 2(s) was committed by the appellant driver and possession holder of the oil tanker; as such the impugned orders are modified and the appeal is allowed to the extent of releasing the oil tanker to the appellant. C.M.A./25/Tax(Trib.) Appeal allowed.