2010 PLP (Trib (PTD)

MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL-II).

This order will dispose off Customs Appeal No.K-86/2006 dated 11-3-2006 filed by the appellant against Order-in-Appeal No.50 of 2006 dated 25-1-2006 passed by Collector of Customs, Sales Tax and Federal Excise (Appeals-I), Karachi.

2. Briefs facts of the case are that on 27-5-2005 the officials of Directorate of Intelligence and Investigation (Customs & Excise), Karachi seized Toyota Land Cruiser bearing Registration No. BC-5524 on the ground that the same had been unlawfully brought into the country. The occupant of the aforesaid vehicle, namely Mr. Shah Mahmood Khan, could not produce any evidence of legal import thereof, Later on the appellant produced copy of Lease Agreement signed by Mr. Kamal Ahmed, Bill of Entry IGM No.448/98 dated 15-1-1998, Index No.77 and NOC No.SI/Misc/Priv-76/2003 dated 4-10-2003, and Ministry of Foreign Affairs letter dated 27-2-2003, and Ministry of Foreign Affairs letter dated 27-2-2003 along with other miscellaneous documents relating to registration of the impugned vehicle. On verification, Customs and PRAL authorities reported that the above-mentioned documents were found to be fake. This led to the conclusion that the impugned vehicle had been smuggled into the country and had been registered on the basis of fake and forged documents.

3. In response, the appellant produced the registration book of the vehicle. Despite the production of the same the subject vehicle was confiscated by the officer of the original jurisdiction. An appeal was filed against the aforementioned order whereby the learned Collector (Appeals) remitted the penalty thereby partially modifying the order-in-original. The appellant now challenged the said orders by way of this appeal.

4. Miss Shomaila, Advocate appeared on behalf for the appellant and reiterated the arguments incorporated in the memo. of appeal. She mainly emphasized on the following points:- (a) That the impugned orders are extremely arbitrary, capricious, mala fide, unlawful, discriminatory, confiscatory and lack proper judicial application of mind. (b) That the appellant is a bona fide owner of the said vehicle which he purchased from the open market. The appellant believed that duty paid vehicle as being sold in the open market without any restriction/prohibition. There does not exist any justification for the confiscation of the subject vehicle in terms of apex Court judgments reported as-SCMR 1995 Page 387, 389 and 407 already decided by the Honourable Supreme Court where it was held that the charge of smuggling could not be levelled in respect of goods which are freely available in the open market and the import of such goods was not banned in the country. (c) That the assumption of the seizing agency and that of the learned Adjudicating Authority and Collector (Appeals) to the extent of treating the subject vehicle as "smuggled" within the frame-work of section 2(s) was wrong. Since the subject vehicle was not smuggled, therefore, the seizing agency had no jurisdiction in the matter as within the framework of law their activities are restricted to the prevention of act of smuggling in terms of the judgments of the Superior Courts reported as (a) PLD 1975 Kar. 482 (b).PLD 1978 Kar.774 (c) PLD 181 Quetta (sic) (d) PLD 1979 Kar. 68 and (e) PLD 1978 Kar. 774. (d) That the confiscation of the vehicle on the ground that customs duty was not paid was illegal when possession of the vehicle was under a valid registration certificate issued by Motor Registration Authority. The vehicle, therefore, does not fall under the purview of clauses (8), (77), (89) & (90) of section 156(1) of the Customs Act, 1969. (e) That the learned Collector (Appeals) upheld the order of the Adjudicating Officer for rightly confiscation of the subject vehicle based on the assumption that the impugned vehicle had been unlawfully brought into the country and registered against fake Customs/Bank documents and wrongful registration of the impugned vehicle has been brought on record. That the law does not place an obligation on the appellant under any provisions of Customs Act, 1969 and it does not constitute an offence particularly the framework of Customs Act, 1969 at this stage, p y when there is no prohibition in the local market to sell such goods. In case, the link of the imported vehicle with the documents produced stood established, the sole charge of smuggling levelled against the appellant falls. Once the appellant produced documentary evidence contending that a valid import of seized goods had been made, and in support of that valid receipts of its purchase from the local market were presented, the burden of proof stood shifted on the respondent to prove the allegation against the appellant. A bona fide purchaser of goods from the local market cannot be punished for the misdeeds of others. (f) That the learned Collector (Appeals) has failed to apply his mind to the fact that the appellant is not the importer of the vehicle in question. The said vehicle was imported by a foreign diplomatic mission and at no point in time when the same was in possession of the High Commission of Malaysia any objection was raised by any authority challenging the authenticity of the import documents. (g) That the learned Collector (Appeals) erred in holding that the said documents were not authenticated by the Assistant Collector of Customs, Appraisement Group-VIII and also the Principal Appraiser Customs, Appraisement Group-VII and keeping in view the same, the appellant entered into the transaction for the purchase of the said vehicle and then leasing the same to his customer. (h) That the appellant clarified his position by replying to the show'" cause notice and explaining to the Collector (Appeals) that the appellant is not the importer of the said vehicle in question. Appellant is a bona fide purchaser of the said vehicle from Mr. Kamal Ahmed Shah and the same was under "Sale and Lease back" arrangement. (i) That the subject vehicle is not liable to seizure and outright confiscation under sub-clauses (8)(77)(89) & 90 of section 156(1) of the Customs Act, 1969 read with S.R.O. No.574/(I)/ 2005 dated 6-6-2005. The subject vehicle was not seized while crossing the border which attracts clauses (8)(9) of section 156(1) of the Customs Act, 1969, nor there was reasonable suspicion regarding unlawful possession which attracts sub-clause (89)(90) of section 156(1) of the Customs Act, 1969. The learned Adjudicating Officer due to mala fide invoked all the provisions of Customs Act, concerning non duty paid goods. (j) That the allegation that the appellant could not produce any documents regarding lawful possession of the subject vehicle is not correct as the appellant duly produced registration book and registration documents issued by Motor Registration Authority, Karachi. (k) That the appellant is the bona fide and lawful owner of the seized vehicle. The seized vehicle was purchased on the basis of registration book which was duly confirmed from the Excise and Taxation Department at the time of purchase and the subject registration and found correct and legal. (l) That the procedure of the registration is known to the respondents and being the Government Agency they were well aware of the fact that the documents along with the payment of duty and taxes are mandatory to be deposited along with the application at the time of acquiring the Motor Registration from the Excise and Taxation Department. The same procedure had been complied by the appellant and the subject registration was allotted by the competent authority in accordance with law. In presence of a valid registration book the occupant is at all times not supposed to carry the import documents. (m) That it is also objected as to the indiscriminate application of (2) penal sections of the Customs Act, 1969 such as sections 16 and 32 as these are not relevant to the issue because the appellant neither imported the subject vehicle in violation of section 16 of the Customs Act, 1969. It is further stated that section 32 can also not be invoked against the appellant because he did not make any declaration before Customs Authorities. The learned Advocate prayed for release of the subject vehicle. He is neither an importer nor a clearing agent and is therefore, not liable for charge of misdeclaration under section 32 of the Customs Act, 1969. (n) The appellant vide his letter dated 8-8-2005 also furnished the photocopies of following documents (i) Lease agreement signed by Mr. Kamal Ahmed under "sale and 'lease back transaction." (ii) Copy of Bill of Entry IGM No.448/98 dated 15-1-1998 Index No.77, was examined which revealed that the vehicle Toyota Land Cruiser was imported by H.E. Mr. Yousaf Bin Hashim, Malaysian High Commissioner Islamabad and which was cleared by Messrs Oriental Shipping Services Karachi. (iii) N.O.C. No.SI/MISC/PRIV-76/2003-VIII dated 4-10-2003 Ministry of Foreign Affairs letter dated 27-2-2003 along with other miscellaneous documents regarding registration of the vehicle bearing Registration Nb.BC-5524. The appellant discharged the burden of proof laid down upon him by the legislature in terms of section 187 of the Customs Act, 1969. Through submission of documents available with him to the Customs Authorities vide his letter dated 8-8-2005. As such he is protected by the blanket indemnification offered by the judgment of Honourable Supreme Court of Pakistan in the case of Wafaq-e-Pakistan v. Awamunas 1998 SCMR 2041. The judgment of the Honourable apex Court was translated/implemented in the shape of section 16-A introduced into the Sale of Goods Act, 1930 to protect such innocent buyers who purchased properties from the open market against full monetary consideration in good faith. That it is pertinent to mention that section 16-A of the Sale of Goods Act, 1930 stipulates that only the seller of the goods will be responsible to the extent of defectiveness of the goods sold. If the vehicle in question was sold to the appellant involving any encumbrances which the respondent had no knowledge, then only the seller was responsible to pay customs duty and leviable taxes. (o) That the learned Adjudicating Officer and Collector (Appeals) Karachi while passing orders have failed to follow the law laid down by the Honourable Supreme Court of Pakistan in the case of Collector of Central Excise v. Imdad Ali reported as 1969 SCMR at page 708 which is binding on the respondents and according to which the onus is entirely on the department to establish the case against the appellant. Thus the learned respondents have failed to follow the basic principle of law laid down by the Supreme Court while establishing the case against the appellant and hence the order is nullity in the eyes of law.

5. On the other hand, the respondent defended the impugned order for the reasons that there was clear documentary evidence on record to the effect that the impugned vehicle had been registered against fake documents. He pleaded that the impugned order be upheld.

6. The contentions put forth by the rival parties have carefully been considered and the orders passed by the respondents have been examined in detail. It is not disputed that the appellant is a bona fide purchaser and there was no allegation against him for the commission of any customs offence. The case of the department against the appellant is that the vehicle belonging to the appellant entered into the country through unauthorized route avoiding payment of duty and taxes leviable thereon and registered against fake Customs/Bank Documents. It is observed in this case that appellant is the 4th Owner having purchased the subject vehicle after due verification from the Motor Registration Authority. At the time of purchase of the vehicle original registration book was handed over to the current owner by the seller of the vehicle and Excise and Taxation Department duly certified the transfer. It is further noted that the Motor Registration Rules require the submission of the original documents pertaining to duty payment before the Registration Authority. These documents are subsequently retained by the Excise and Taxation Department as its record and the registration book is issued to the applicant. Thus the original documents regarding the import formalities and payment of customs dues in this case are supposed to be with the Excise and Taxation Department Karachi.

7. To bring the case under section 2(s) of the Customs Act, 1969 it is a mandatory requirement of law that either the party concerned had tried to get the release of the vehicle without payment of customs duty and taxes or the goods have been brought in country from a prohibited route or it was seized within the notified area as mentioned in S.R.O. 118(I)/83 dated 12-2-1083, but in the present case nothing of the sort has been alleged against the appellant.

8. Even, otherwise, it is a settled principle of law that the goods which are available in the market are presumed to have been brought in the country after payment of customs duty and taxes so in this particular case detention of vehicle of 1992 in the year July, 2005 is devoid of force, because apart from the logical aspect, section 211 of the Customs Act, 1969 prescribes that importers and exporters are bound to maintain record for a maximum period of five years. Therefore, calling import documents of a vehicle after a period of more than seven (7) years is neither logical nor is covered under any provision of law.

9. The department was directed to reply to the two objections raised by the counsel for the appellant with reference to the Annexure D, G & E appended to the comments dated 18-12-2008 submitted by Directorate of Intelligence and Investigation Karachi with documentary evidence on the next date of hearing. Even the concerned Appraiser of Collectorate of Customs (Appraisement) was directed to attend the hearing on the next date with relevant file from which NOC for the Mercedes Car belonging to Qatar Consulate was issued. A letter was also written to Collector of Customs (Appraisement) Custom House, Karachi dated 22-4-2009 by the Assistant Registrar-Bench-II, Karachi to comply with the orders of the Honourable Tribunal. On 5-5-2009 the representative Appraising Officer of the Appraisement Collectorate provided registration documents of Mercedez Benz Model 1983 which was registered against the IGM and Index Nos. supplied by the appellant. These documents have been placed on record. The Investigation Officer of the Directorate of Intelligence and Investigation (Customs and Excise) Karachi admits that the Registration Book issued by the Motor Vehicle Registration Authority is a valid document. He also admits that the supporting documents furnished by the appellant pertaining to the sale of the vehicle to Mr. Bashir Jan Muhammad and subsequent buyers have till to date been not verified by the office of the Directorate of Intelligence and Investigation (Customs and Excise).

10. In these circumstances, the evidence of legal import is substantiated by the registration of the vehicle. The action of the Department is based on presumptions. A similar issue came up for discussion before the Honourable Supreme Court of Pakistan in the case of Collector v. Professor Muhammad Khan: Civil Petition No.603-K of 2004 decided on 18-7-2006, wherein their lordships observed as under: " ..The learned counsel for the petitioners has not been able to satisfy us that the Customs Authorities have unbridled powers under Customs Act, 1969, to detain the goods of foreign origin at any time by raising the presumption that same were not brought into Pakistan in a lawful manner. The Customs Authorities and such other public functionaries are not above the law to command absolute authority in exercise of their power and in absence of any proof that goods in possession of a person were brought into the Pakistan in violation of any law, have no authority to detain such goods merely on the basis of suspicion."

11. The Departments' contention regarding application of section 187 of the Customs Act, 1969 carries no weight. It is an admitted fact that the appellant purchased the vehicle in question from the open market which they got registered with the Motor Vehicle Registration Authority Karachi. It is settled law that all officials acts are presumed to have been done in accordance with law and under authority vested in this regard unless contrary is proved. Applying this principle, it is presumed that the vehicle was registered with M.R.A. under valid documents required for registration of the vehicle. The Customs Department did not challenge the genuineness of the registration book and thus prima facie, it is established that the appellant was in possession of the vehicle under the valid registration book issued by the MRA under the law and such, the burden cast upon the appellant under section 187 of the Customs Act, 1969 was discharged by them. The same view has been taken by the High Court of Balochistan, Quetta in a case reported as 2003 PTD 2118, the relevant extracts are as under:

"It is not the case of the appellant that the Registration Book under which the vehicle was registered was not issued by the M.R.A. as such; was fake book prima facie it is established that the respondent was in possession of the vehicle under the valid permit issued by the Motor Registration Authority under the law, as such the burden cast upon the respondent under section 187 of the Act was discharged by him. On the other hand the Customs Authorities failed to discharge the ultimate or legal burden cast upon it and it was doubtful as to whether the vehicle in question was registered on fake documents as no such document was produced nor the concerned authorities initiated any proceedings regarding fake registration of the vehicle against the original owner or the concerned officials of Motor Registration Authorities which, if committed was not only an offence under the ordinary law but an offence punishable under Customs Act. Thus it was doubtful under the given facts and circumstances of the present case as to whether the vehicle in question was got registered under the Motor Vehicle Ordinance through the valid documents or otherwise as such; the respondent was entitled to the benefit of doubt on general principle and rightly extended by the learned Appellate Tribunal to him. For the foregoing reasons we find no merit in the instant appeal within the meaning of section 196 of the Customs Act, 1969 and the same is accordingly dismissed in limine."

12. In a similar case decided by a judgment passed by Customs, Excise and Sales Tax Appellate Tribunal in Customs Appeal No.Q-197 of 2003, it is observed as under:

"But while observing so, Adjudicating Officer has failed to ignore that the registration of vehicle is sufficient proof of the fact that the vehicle is legally imported in the country because as soon as the registration papers are presented before MRA it is their responsibility to check the documents and examine them thoroughly with reference to the genuineness before registration. It also cannot be overlooked that the vehicle in question is of 1989 Model whereas the action on charge of smuggling has been taken on 20-11-2002 after lapse of about 14 years, calling upon the party to produce the bill of entry or any other legal import documents is nothing but a practical joke with the party as by virtue of section 211 of the Customs Act, 1969 importer or exporter is liable to maintain importation related record and documents only for a period of five years, an individual importer who imports goods for private or personal use is excluded from the purview of that section thus once the appellant produced the registration documents the burden or proof shifted on the respondent and they have failed to discharge that. Upshot of the above discussions shows that the negligence on the part of MRA Jafarabad has been put on the shoulders of appellant which is an immense misuse of law and this malpractice committed by the Department unnecessarily put the citizens in trouble. By placing Registration Book and NOC issued by Excise and Taxation Quetta-Pishin District appellant has produced sufficient documents to prove himself as legal owner of the same with these observations the Order-in-Original is set aside and the appeal is allowed."

13. The aforesaid view is also supported by a judgment passed by Member, Judicial-II, Customs, Excise and Sales Tax Appellate Tribunal Bench-II Karachi in Customs Appeal No.459 of 2006 wherein it was observed that: "Para

5. Having considered the arguments-raised in this case. The vehicle is 1990 Model and shows to be registered in the name of the appellant Mr. Ghulam Muhammad on 5-1-1998 purchased from one Urs son of Haji Jhanda Jamali these documents were not found to be fake by the Motor Vehicle Registration Department that under provisions of section 211 of the Customs Act, 1969, the record had to be maintained for not more than five years Para

6. Hence in view of above findings of this Tribunal in similar matters I am inclined to arrive at the conclusion that the Customs Authorities have unlawfully seized the vehicle and confiscation of the same is unlawful and is illegal and the act of the department was without jurisdiction. Hence this appeal is allowed and the vehicle should be released to the owner by the seizing agency forthwith."

14. The above judgment of the Tribunal was upheld by High Court of Sindh at Karachi in Special Customs Reference Application No.281 of 2007 dated 29-11-2007 in the case of Collector of Customs (Preventive) Karachi v. Ghulam Muhammad reported as 2008 PTD 525 where it was held that "the contention of applicant was taken care by the Tribunal who has rightly allowed the appeal vide impugned judgment. The factual position, narrated in the impugned judgment in respect of the registration of the vehicle in question in the name of the respondents, which were not found to be fake by the Motor Vehicle Registration Department has not been contrived by the learned counsel. Learned counsel has not been able to point out any illegality or irregularity calling for interference in the impugned judgment, hence this Special Customs Reference Application is dismissed."

15. In the present case also, the appellant who is the fourth purchaser of the vehicle produced Registration Book of the subject vehicle which was never doubted and thus he discharged the burden cast upon him by section 187 of the Act. As such, the contention raised by the department is not tenable.

16. In view of the above findings of superior judicial fora in a number of similar cases it is accordingly observed that after the presentation of registration book by the appellant, the action taken by the respondent was not warranted by law. The impugned orders thus suffer from illegality and the same are accordingly set aside. The appeal is accordingly allowed. H.B.T./19/Tax(Trib.) Appeal allowed.