P L D 1988 Lahore 489 (PLP)

This is a constitutional petition filed by Hassan, Ali, petitioner, challenging the order of the Collector of Customs, Lahore, dated 15‑1‑1964 and that of the Central Board of Revenue dated 8‑3‑1967. 2.???? The brief facts of the case are that the Crimes Branch of the Lahore Police raided the shop of Hassan Ali, petitioner, who was a goldsmith in Rang Mahal, Lahore, and took into possession 121 gold bars weighing 1202 tolas, 598 Indian currency notes of Rs.10Q each and some silver demonetized coins. On 10‑7‑1956, the police arrested the petitioner and one Abdul Ghaffar Memon, who happened to be present in the premises of the petitioner at the time of the raid. On 10‑7‑1956, both the petitioner and Abdul Ghaffar Memon were released on bail. On 17‑7‑1956, the petitioner produced before the police the moulds with which he had been marking the gold bars with the figures 11999/1011 etc. The police after having conducted investigation, found that there was no incriminating evidence against the petitioner and Abdul Ghaffar and instead of sending up the ‑case before the Magistrate for trial according to law, they forwarded the articles seized to the Collector ‑of Customs for his adjudication under section 182 of the Sea Customs Act, 1878.

3. On 13‑8‑1956, the Collector of Customs called upon the petitioner to show cause within ten days from the date of issue of the Notice as to why penal action under sections 167(8) and 167(81) of the Sea Customs Act, read with section 9 of the Land, Customs Act, should not be taken against him in respect of:‑ (i)???? possession by him of contraband. articles, namely gold., bullion and Indian currency. (ii)??? possession of 2125 demonetised silver coins which allegedly the respondent was about to smuggle out of Pakistan.

4. The petitioner submitted his reply on 8th October, 1956, the Collector of Customs was pleased to, hear the case on 25th October and 5th November, 1956.

5. On 10th January, 1957, the Collector of Customs ordered confiscation of 1202 tolas of gold bullion under sections 167(g) and 167(81) of the Sea Customs Act read with section 9 of the Land Customs Act and gave the petitioner the option under section 183 to redeem it on payment of Rs.1,37,

000. With regard to the Indian Currency Notes and the demonetised coins, the Collector was pleased to direct that the same be returned to the petitioner after the payment of personal penalty of Rs.50,000.

6. On 8th April, 1957, the petitioner filed a writ petition (W.P.No.365 of 1957) in the High Court of West Pakistan tinder Article 170 of the late Constitution praying for the quashment of the order of the Collector by issue of a writ of certiorari and further prayed that the gold recovered from him be ordered to be returned by issue of a writ of mandamus. A Division Bench of this Court on 19‑3‑1958 determined the. question of repugnancy of the provisions of Sea Customs Act and Article 6 of the late Constitution and declared the provisions of section 167(8), void.

7. The Collector filed an appeal before the Supreme Court of Pakistan and during the pendency of the said appeal, the Constitution of 1956 was abrogated and it was no longer possible for the petitioner to contend that the provisions of section 167(8) and 167(81) were void on account of repugnancy to the provisions of Articles 5 and 6 of the late Constitution,, 8????? Their Lordships of the Supreme Court of Pakistan by their order dated 11‑11‑1959 remanded the case to the High Court for deciding the writ petition filed by the petitioner on grounds other than those based on fundamental rights.

9. That the petitioner's Writ Petition No.365 of 1957, after being remanded to the High Court for disposal as aforesaid, came up for hearing before a Division Bench consisting of Mr. Justice Shabbir Ahmad and Mr. Justice Bashir Ahmad who on 22‑6‑1961 remanded the case to the Collector for readjudication , with certain directions. 10, That clear directions were issued by their Lordships to the Collector to readjudication the case from. the stage that he had passed the earlier order, after giving the petitioner full opportunity to produce evidence whether the ingredients of section 167(8) and 167(81) of the Sea Customs Act were satisfied or not.

11. That a fresh show cause notice dated 3‑11‑1961 was issued to the petitioner, in reply to which, we petitioner submitted a detailed written reply. The Collector thereupon proceeded to decide the case and passed an order dated 15‑1‑1964 directing that gold weighing 1202 tolas and valued at Rs.1,45,442 shall be confiscated under section 167(8) and section 167(81), but gave the petitioner an option under section 183 of the Sea Customs Act, 1878, to redeem it on payment of a fine of Rupees Seven Laus, in lieu of confiscation. It was stated that the option would, however, lapse, if not exercised within three months of the date of issue of the order. The Collector further ordered that a personal penalty of Rs.50,009 shall be imposed on the petitioner.

12. That the petitioner filed an appeal before the Central Board of Revenue under section 191 of the Sea Customs Act, 1878, against the order dated 15‑1‑1964. passed by the Collector directing confiscation of gold weighing 1202 tolas under section 167(8) and 1167(81) and imposing a personal penalty of Rs.50,000 and simultaneously moved a stay application.

13. The Central Board of Revenue, by letter dated 16‑1‑1967, called upon the petitioner to pay the penalty of Rs.50,000, failing which the appeal would be dismissed. The petitioner replied to this letter expressing his inability to pay the demand and requested for a 'hearing.

14. That on or about the 10th of March, 1967, the petitioner received the order of the Central Board of Revenue, dismissing the petitioner's appeal for failure to pay the penalty.

15. Being aggrieved by the aforesaid orders of the respondents , the petitioner preferred a writ petition in the High Court, which is now before me for disposal. 15‑A. 01, behalf of the petitioner, a number of submissions have been made. First, that the gold bars recovered from the shop of the petitioner were of local origin and not foreign. In this respect it is submitted that had they been of foreign origin, each gold bar would have weight ten tolas, but the 121 barb which were recovered weighed 1202 tolas i.e. short by 8 tolas. It is further submitted that the 'markings 11999/1011, 11995/1011 and 1199/1011 were made by the petitioner after refining the gold upto that fineness. In this connection it is submitted that on 17‑7‑1956, the petitioner had produced the said moulds relating to the markings before the police and had also offered before the Collector to produce the said bars again before him with the same fineness and the same markings, but the Collector had refused to accept the demonstration or to check whether the moulds produced by the petitioner could have produced the markings as were found on the gold seized. It is urged that just markings, such as '1999/10", 11995/1011 or 1199/10", do not simpliciter lead to any inference that the gold ‑is of any foreign origin. In this connection, Muhammad Iqbal v. The State 1983 P Cr. L J 1351 has been cited. It is urged that all Courts in Pakistan right upto the Supreme Court now accept the position that gold can be melted upto a fineness of 999.8 by the goldsmiths in Pakistan. In this connection, S.A. Haroon v. The Collector of Customs P L D 1967 S C 458 at 463 is cited. Lastly, it is urged that the Collector did not get the moulds produced by the petitioner checked in order to hold that the markings on the gold seized did not correspond to that which could have been produced by the moulds produced by the petitioner.

16. On behalf of the respondents a number of submissions have been made. First, that since the petitioner's case is that he stamped gold bars with markings to create a reasonable belief in the mind of the purchasers that that the gold was imported gold, the fact that the collector of custom shared the same belief was sufficient in shift the burden. on the petitioner under section 177‑A of the Customs Act to show that no act had been committed or, his part to defraud the Government of any duty payable thereon, or to evade any prohibition restriction for the time being in force. Second, that the petitioner took different stands different times, for instance, in the petitioner's statements recorded on 11‑7‑1956, 13‑7‑1956, 17‑7‑1956 and 23‑7‑1956 by the Preventive Officer, he took up the plea that he could not recall how, when and where he came to possess the seized gold or from whom he purchased it, that he did not maintain any account of daily sales and that he had purchased tezabi ,gold and had converted it into bars of ten tolas each in a mould and had numbered them, that in his written statement to the show cause notice he had stated that eighty‑six bars out of one hundred twenty‑one were purchased by him from one Jafar Ali of Montgomery, who had himself purchased them from one Ghulam Farid, in whose favour they were released by Karachi Customs as far back as 1951, and that the rest of the gold bars had been prepared from the gold ornaments/gold was purchased by him and that during arguments he had asserted that according to the report of the Chief Assayer, Pakistan Mint, gold bars seized were a motely collection of those which could be produced locally and manufactured outside Pakistan and that all the bars were the result of the gold procured by the petitioner in Pakistan and refined by him. which method he ‑was prepared to demonstrate before the Collector. It is submitted that since the stand of the petitioner is contradictory, he has no case. It is further submitted that since 86 bars released by the Collector, Customs House, Karachi, in 1951 bore marks of 11999/1011 and 11998/1011, whereas 121 gold bars seized from the petitioner bore marks as under:‑ ?103, bars bearing mark ?999/10? 7 bars bearing mark ?99/10? ?11 bars bearing mark ?995/10? the case of the petitioner that 86 bars of the gold seized were those released by the Karachi Customs in 1951, was incorrect. Third that the report of the Chief Assayer, Pakistan Mint, shows that at least 40‑41 gold bars were of fineness 999.9, which obviously meant that they were of foreign origin.

17. I have heard the arguments of the learned counsel for the petitioner and the respondents and have also perused the documents.

18. Before dealing with the arguments, it is necessary to point out that in this case, the petitioner's statement was recorded by the officers of the Customs Vigilance on four different dates and, if I may say so with respect, it appears he was badgered into making contradictory statements in order to weaken his case. Such a practice is to be deprecated and I record my displeasure, so that it is not repeated. ,

19. In order to understand the case, it is necessary to reproduce the relevant sections of the Sea Customs Act, 1878, as were in force on the date when the present offence was committed. Sections 167(8) and (81) and 177‑A may be produced here with advantage: ?

167. PUNISHMENT FOR OFFENCES.‑‑The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively:‑ If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of the Act be imported into or exported from Pakistan contrary to such prohibition or restriction; or ?if any attempt be made so to import? or export any such, goods; or ?if any such goods be found in any package? produced to any officer of Customs as containing? such goods; or if any such goods, or any dutiable? goods be found either before or after landing or shipment? to have been concealed in any manner on board any? vessel within the limits of any port in Pakistan; or if any goods, the exportation of which is prohibited or restricted as aforesaid, be brought to any wharf in order to be put on board any vessel for exportation contrary to such prohibition or restriction, if any person knowingly, and with intent to defraud the Government of any duty payable thereon. or to evade any prohibition or restriction ?????? for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping on concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with ?????????? respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid; or If any person is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods. Such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding five times the value of the goods or on conviction before a court to imprisonment for any term not exceeding seven years or to fine or both Note.‑ "Value of goods" may mean either the market value of goods or cost price of goods. It is not clear which value 'will be taken into account for determining fine. In the ordinary meaning" value of goods" will be taken as the market value of the goods. 177A. Burden of Proof.‑(1) Where any goods to which this section applies are sized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on ‑the person from whose possession the goods were seized. ?(2) This section shall apply to such goods as the Central Government may by notification in the official Gazette, specify in this behalf.

20. The first question that arises is whether any offence under section 167(8) of the Sea Customs Act, 1878, stands made out. Since there is no evidence to show that the petitioner either exported or imported or attempted to export or import the gold into or out of Pakistan, an offence under this section does not stand made out. The Collector has also not given any finding in this respect. No offence under section 167(8) therefore, is made out.

21. The next question that arises is whether an offence under section 167(81) of the Sea Customs Act stands made out. In this connection it is necessary to show that the petitioner possessed gold bars which were of foreign origin and he possessed them knowingly and with intent to defraud the Government of any duty payable thereon, or he possessed them knowingly and with intent to ‑evade any prohibition or restriction for the time being in force, under or by virtue of the Act. If it cannot be shown that the gold seized is of foreign origin, then obviously the possession of local gold will be one in respect of which no duty is payable, or on which there is no prohibition or restriction for the time being in force, under or by virtue of the Act. In the first instance the gold seized was not seized by the Customs. It was seized by the Police, who found no case of smuggling made out, but who delivered the gold to the‑ Customs authorities, to wash their hands of the case and to permit the Customs to seize the same, if they considered any offence was made 'out. Section 177‑A of the Customs Act, which shifts the burden of proof on an accused, strictly applies to cases where goods are seized under the Sea Customs Act. Here the goods were not seized under the Sea Customs Act. But even assuming that figuratively they were, the question still remains whether the Customs had the reasonable belief that the gold was of foreign origin, because without that it was not possible to state that they had any belief that an act of defrauding Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force by or under the Sea Customs Act, had been committed in respect of such goods. It may be true that initially when the Customs seized gold bars having numerical markings of the type appearing on foreign gold bars and rennies, that ex facie they have reasonable belief that they appear to be of foreign origin, but once material comes on the record to disprove the same, it cannot be stated that the accused had not discharged his burden. Perhaps in a given case, the material may be such that the necessity of the accused being called upon to disprove the burden ?may not even arise.

21. This, therefore, brings me to the main question, whether the gold bars recovered from the petitioner were of foreign origin. 22. 1 wanted to inspect the gold bars seized. Surprisingly, they have all been melted down. Why they have been melted down, before the final disposal of this case, leaves much to be desired. The best evidence, which would have enabled any Court to determine the origin of the gold, foreign or otherwise, has been destroyed. This is not D the first case where gold seized has been melted down, before the final conclusion of legal or Court proceedings. This practice must be deprecated. The weight of any foreign gold bar or rennies never drops below 0.1% of that stated. If the foreign gold bar or rennie is of ten tolas, its weight will never drop below 9.99 tolas. In the instant case the 121 bars of gold which were recovered, all purporting to be of ten tolas in weight actually weighed 1202 tolas i.e. short by 8 tolas. The report of the Chief Assayer of the Pakistan Mint also does not give the weight of each gold bar. Further, the fineness of all foreign gold bars and rennies is never below 999.9 (parts per one thousand). The report of the Chief Assayer dated 21‑5‑1958, a copy of which has been placed on record, shows that only 40‑41 of the 121 bars had fineness of 999.9 (parts per one thousand), whereas the remaining bars ranged between a fineness of 999.8 to 994.6 (parts per one thousand). Since the weight of each of the 40‑41 gold bars having fineness of 999.9 (parts per one thousand) has not been given, no straight conclusion can be drawn that they are of foreign origin. The foreign gold bars and rennies contain markings showing the names of the manufacturers or minters with markings such as '1999.91'. The marking 11999.9 indicates that the fairness of the gold is not below 999.9 (parts per one thousand). The markings 11999/1011 and 995/1911 indicate that the gold is refined unto a fineness of 999 or 995 (parts per one thousand) and that the eight of each bar is 19 grames or 10 tolas. The marking 1199/1011 is very likely indicative of the fact that the fineness of the gold is 99 (parts Der one thousand) though the marking 111011 shows that the weight is 10 grams or 10 tolas. If markings on the gold bars are any indication, the seized lot is a motley collection of gold with fineness from 995.0 to 999.9 (parts per one thousand). The absence of the name of the foreign manufacturer or minter and the disparity in weight, as stated above, clearly' shows that the gold bars are not of foreign origin. Such marking as 1199911 also does not by itself indicate that the origin of gold bars is foreign. If any authority is required for view, Muhammad lqbal v. The State 1983 P.Cr.L.J. 1351 may be cited. In the instant case, the petitioner had produced a number of moulds relating to the markings which he had made on the gold bars seized, before the police, after he was arrested. He had also offered to produce before the Collector, the same type of gold bars with the same fineness and the same markings, but. the Collector refused to accept the demonstration, or to check whether the moulds produced by the petitioner could have produced the markings as were found on the gold seized. Way back in 1967, when S.A. Haroon's case was decided (P L D 1967 SC 458), it was accepted that gold could be melted upto a, fineness of 999.8 (parts.. per one thousand) in Pakistan by the local goldsmiths. Since then, local goldsmiths have acquired better techniques and know‑how. Since gold in the form of bars and rennies with markings such as 1199911 are more fancied and sell better in Pakistan, local goldsmiths have now acquired the technique of producing such types of bars or' rennies with such markings with fineness even ranging up 999.9. Taking all circumstances into consideration, it is not possible to hold that the gold bars which were recovered from the petitioner's shop were of foreign origin. Thus, no offence under section 167(81) of the Sea Customs Act, 1878, appears to be made out.

23. Apart from the above, items Nos.8 and 81 of section 167 of the Sea customs Act, 1878, as were in force on 9‑7‑1956, when the present gold was seized from the petitioner, were ex facie discriminatory between subject and subject, as they permitted a Customs Officer in his absolute discretion to choose whether a person could.‑be dealt with departmentally and to have his goods confiscated with a pecuniary penalty, or to be prosecuted in a Court of law with the serious consequences of being imprisoned for a term of year. These provisions were repugnant to Article 5 of para. 11 of the Constitution of Pakistan, 1956. In this view of the matter, a Division ,Bench of this Court in the present petitioner's case (W.P.No.365 of 1957 decided on 19‑3‑1958), held the said provisions as void and observed that the petitioner could not have been proceeded against under these provisions. The Division Bench even went to the extent of striking down the amendments that were made in items 8 and 81 of section 167 of the Sea Customs Act of 1857, by Central Act XXXIV of 1957 by holding that the amendment legislation came within the mischief of Article VI of the constitution of Pakistani., 195c, and was, therefore, void. Since the fundamental rights have now been restored the position, reverts as it was when the above decision of the Division Bench was delivered it the case of the petitioner. I would, therefore hold that on the date of the raid, items (8) and (81) of. section 167 of the Sea Customs Act, 1878, were discriminatory and, therefore void and that the petitioner could not have been proceed against; under these provision

24. For the foregoing reasons, this petition is accepted and the order of the Collector of Customs, Lahore, dated 15‑1‑1964 and that of the Central Board of Revenue dated 8‑3‑1967 are both hereby. declared to be void and having been passed without lawful authority and are accordingly set aside. The respondents shall return 12 21 tolas of gold to the petitioner or its value at the present market

25. The petitioner shall be entitled to his costs. Rupees Two Thousand (Rs.2,000) is fixed as counsel's fee. M.B.A./H‑69/L ?????????????????????????????????????????????????????????????????????? Petition accepted.