2013 PLP (Trib (PTD)

GULAB SHAH AFRIDI, MEMBER (JUDICIAL).

This appeal filed by Hazrat Aman and another (appellants herein) is against the Order-in-Original No.139 of 2010 dated 8-3-2010 passed by the learned Collector Custom (Appeals), Peshawar, whereby the while maintaining Order-in-Original No.35 of 2010 dated 22-1-2010, dismissed appeal of the appellants.

2. Brief facts of the case as recapitulated in the order-in-appeal are that the Customs Mobile Squad, Nowshera on prior information intercepted a Hino Truck bearing Registration No.K-9469/Peshawar on G.T. Road at Khairabad. Search of the truck led to the recovery of foreign origin scrap (as per details in the Recovery Memo. No.4 of 2010 dated 4-1-2010). On demand, the occupants of the vehicle namely Hazrat Aman and Kaibat Khan failed to produce any proof with regard to legal import/lawful possession of the goods so recovered. Therefore, the Customs staff seized the same along with the vehicle under section 168 of the Customs Act, 1969 for violation of sections 2(s), 16, 157 and 178 ibid read with section 3(1) of the Imports and Exports (Control) Act, 1950 punishable in terms of clauses (8) and (89) of subsection (1) of section 156 of the Customs Act, 1969 read with section 3(3) of the Imports and Exports (Control) Act, 1950. Subsequently, after completion of the requisite formalities, the matter was adjudicated upon by the Deputy Collector Customs (Anti-Smuggling Division), Peshawar who vide Order-in-Original No.35 of 2010 dated 22-1-2010 ordered outright confiscation of the goods, however, released the vehicle against payment of 20% redemption fine of the customs value of thereof.

3. Aggrieved of the order-in-original, the appellants filed appeal before the Collector Customs (Appeals), Peshawar, who vide his Order-in-Appeal No.139 of 2010 dated 8-3-2010, while maintaining the Order-in-Original, dismissed the appeal as mentioned in pare-1 above. Hence the instant appeal on the following grounds:-- (i) That orders of both the respondents are illegal against the law and facts of the case, hence liable to be set aside; (ii) That order of both the respondents are the result of misreading and non reading of evidence available on file, hence liable to be set aside; (iii) That the learned respondent No.2 did not follow the direction issued by the learned respondent No.1 but a report is obtained from a person who is also part of the seizing agency which is illegal and against the natural justice. Moreover, the report is also silent about the origin of goods, mere mentioning of foreign origin is not sufficient to establish that the goods are smuggled one; (iv) That the appellant purchased the seized goods from Gul Scrap Dealer, Haji Israr-ud-Din and Nizam Scrap Merchant, Sadiq Shah Scrap Merchant, Bashir and Kabir Old Scrap Merchant at Peshawar. Moreover, these dealers collect goods from different workshops of the city meaning thereby that the seized goods are local scrap; (v) That both the learned respondents misinterpreted S.R.O. 499(I)/ 2009 dated 13-6-2009 because S.R.O. 499(I)/2009 is not applicable on a lawfully registered vehicles according to the judgment of this Honourable Appellate Tribunal Customs, Peshawar, hence imposition of Redemption fine of Rs.1,30,000 is illegal; (vi) That additional grounds/arguments production of documents may kindly be allowed at the time of hearing.

4. During the course of arguments on 8-12-2010, learned counsel for the appellants while reiterating his grounds of appeal, contended that the goods in question were locally purchased from the local market on payment of handsome consideration against proper purchase receipts. He further contended that the examination/verification of the scrap was conducted and the Khyber Pakhtunkhwa Chamber of Commerce and Industry Peshawar had nominated their representative and the goods were accordingly examined, who has given his opinion on the letter head of the Khyber Pakhtunkhwa Chamber of Commerce and Industry Peshawar bearing No.17593/KP/Custom dated 13th July, 2010. Learned counsel for the appellants also submitted that the purchase receipts were neither verified by the seizing officer nor by the adjudicating officer without any reason, however, the appellants request that if this Tribunal constitute a committee to get verified the purchase receipts produced by the appellants to meet the ends of justice. He also submitted that after the seizure the appellants also submitted application to the Collector Customs on 14-1-2010 to prove it to be locally purchased, which is placed on file. He lastly contended that the goods may kindly be released unconditionally and the redemption fine imposed on the vehicle be remitted.

5. On the other hand, Mr. Naseer Khan, Deputy Superintendent/ representative of the respondents/department opposed the contentions of the learned counsel for the appellants and submitted that the goods are of foreign, origin and in huge quantity, which were brought clandestinely into the country in violation of the provisions of the Customs Act, 1969. He further contended that examination/verification indicates that the goods were of foreign origin. He lastly prayed that the appeal of the appellants be dismissed and the impugned order be upheld.

6. I have heard both the parties at length and have gone through the record of the case. Perusal of the record would reveal that an examination/verification was conducted at the directives of this Tribunal vide order sheet dated 14-4-2010 to ascertain the authenticity of the origin and the purchase receipts produced by the appellants. Scrutiny of the said verification report revealed that all of the three members i.e., Mr. Abdul Qayyum Khattak, Superintendent Customs, Mr.Waliullah, Advocate and Mr. Khan Gul, nominee of the Khyber Pakhtunkhwa Chamber of Commerce and Industry, Peshawar different version from each other. However, keeping in view that one of the members of the Commission who was representing the appellant and the other was representing the respondent-department, therefore, the examination/ verification report submitted by the nominee of the Khyber Pakhtunkhwa Chamber of Commerce and Industry, Peshawar through their Secretary General is taken into consideration, which is reproduced for convenience of perusal as below:-- "I am directed to inform you that our nominee Mr. Khan Gul Awan, Proprietor, Motor Palace, 24-The Mall, Peshawar as member of the Committee for verification of the seized auto scrap in response to your Letter No.Cus/AS/Adj/35/2010/737 dated 23rd June, 2010 has examined the seized auto scrap on 4th January 2010 lying in the premises of State Warehouse, Nowshera and found the same to be of foreign origin but used in Pakistan and become scrap." The above report of the nominee of the Chamber of Commerce, Peshawar supports the contention of the appellants, who contended is that "the goods are of foreign origin but, used in Pakistan and become scrap" meaning thereby that the seized goods are not serviceable. However, regarding the local purchase of the scrap, the earlier report conducted at the appellate stage, is silent, therefore, on the request of the counsel for the appellants, another committee comprising of Mr. Inayatullah Khan, Advocate, Mr. Sikandar Khan, Advocate (members of the Peshawar Bar Association) and Mr. Gul Said Deputy Superintendent Customs Mobile Squad No.1, Peshawar, was constituted with the direction to submit their report regarding the local purchase of the goods, they submitted the report on 14-12-2010, whereby they confirmed, the local purchase of the scrap and availability thereof in various shops at Peshawar. The goods were admittedly purchased from local markets and this fact has duly been verified by the Commission constituted by this Tribunal at the request of the parties. The said Commission after verification of the purchase receipts from the shopkeepers, who had sold the scrap in question to the appellants, has also recorded statements of the shopkeepers and submitted to this Tribunal. The said report as well as statements recorded by the committee revealed that the goods in question were purchased by the appellants from the local market. Moreover, if taken into consideration that the goods in question are of foreign origin then one can think that there are hundreds of shops/dealers of scrap in the vicinity of Peshawar, where lot of scrap of vehicles imported/locally manufactured, is available having a number of mechanics/workshops, conducting boring etc., by changing the old unserviceable parts and replacing it by new one. It is also an admitted fact that a large number of foreign origin vehicles are imported into Pakistan (after payment of customs duty and other taxes) every year and similarly, when an item of these vehicles become out of order during its plying on the roads as well as accidents/deterioration, then definitely these are replaced and as such the old/useless spare parts/accessories are sold to these shopkeepers/scrap dealers. Further, the old scrap dealers after collecting a huge quantity of different items segregate the same and sell it to different consumers. In this case too, the situation seems to be the same because the shopkeepers, from whom the scrap in question was purchased, have given their respective statements to have sold the scrap in question to the appellants. Reliance is placed on a judgment of this Bench reported in 2004 PTD 1838 whereby a similar nature case was decided and the goods were released unconditionally.

7. In view of the above discussion, it is thus crystal clear that the scrap in question was purchased from the local markets against proper purchase receipts duly verified by the above Commission and the prosecution failed to bring on record as to whether the scrap in question is serviceable or unserviceable as evident from the Recovery Memo. Therefore, I am inclined to accept the plea of the appellants as well as considering the examination/verification report of the nominee of K.P.K. Chamber of Commerce and Industry, Peshawar and Bar Members (Commission) that the goods are of foreign origin but used in Pakistan being parts of legally imported vehicles and collection of shopkeepers/ scrap dealers from the workshops and became scrap, which otherwise means that the same were not smuggled one, it was collected by the shopkeepers/scrap dealers after the same was out of order and subsequently, sold to the appellants against proper receipts. Further the prosecution has nothing to say about any marks and number on the goods seized to show the foreign originality of the goods in question.

8. As such, while accepting the instant appeal, I hereby set aside the impugned orders passed by the respondents Nos.1 and 2 and order to release the scrap to the appellants unconditionally. It is, however, ordered that the goods (scrap in question) be handed over to the appellants after cutting, piercing and deshaping at the cost of the appellants, if not required in any other case. The redemption fine imposed on the vehicle is also remitted because, the driver of the vehicle has loaded the same scrap from the local market against proper bilties for Gujrat for melting purposes not concealed, the contents were mentioned in the Bill of Entry, which reflects that they had no intention of smuggling or to avoid taxes, as such, the prosecution has failed to prove the existence of their case as mentioned under section 156(1) (8) of the Customs Act, 1969. CMA/130/Tax(Trib.) Appealaccepted.