P L D 1962 Dacca 162 (PLP)

MURSHED, J.‑This is an application for the issue of a Writ of certiorari for quashing an order passed by the Collector of Customs, Chittagong, being Order No. 760, dated the 17th October 1959. Petitioner, Osman Abdul Karim Bawaney, has described himself as the proprietor of a business concern, which carries on business under the name and style of Siddiq Mohamed Bawaney & Co. The said company are importers, among other things, of nylon laces. In August 1957, the petitioner imported three bales of nylon -laces‑seconds from New York to Chittagong at the rate of '51 dollar per pound, as alleged by him. According to his calcula tion the total value of the sail consignment was 328'44 dollars. The petitioner has appended with his petition what is claimed to be the original invoice dated the 17th of June 1957, which was supplied by the exporters, Messrs Mill Cotton Exporters Co., Inc. of New York. The original certificate of origin dated the 14th of June 1957 and given by one Mr. E. Koechel and attested by a Notary Public, State of New York, has been annexed to the petition and marked as "B". Various other documents have also been annexed to the petition. The aforesaid consignment arrived at Chittagong on or about the 28th of August 1957, and the petitioner duly filed the Bill of Entry and the usual declaration from stating therein that the actual price charged by the said exporters for the said consignment was 'S1 dollar per pound C & F. The Customs authorities and the valuation branch after examining the consignment assessed customs duties, accepting the correctness of the value declared by the petitioner and the said consignment was released in normal course. Subsequently, after an interval of one year and eight months, the petitioner was served with a notice, dated 4th/6th June 1959, to show cause as to why higher assessment of customs duties should not be levied against him as a result of an investigation under section 30 of tee Sea Customs Act (hereinafter referred to as the Act) and also why penalty should not be imposed upon the petitioner under the provisions of subsections (8) and (9‑B) of section 167 of the Act for violation of the provisions of section 39 of the Act which provide for punishment for making a false declaration as to the value of the goods imported. The said notice has been marked as Annexure E the material portion of which reads as follows:‑ "You imported the above‑mentioned goods and declared the value in the relative VBF 6‑A declaration and also In the bill of entry '51 s per lb. C & F whereas fair measure of the normal price of these goods under section 30 of the S. C. Act has been found to be 1.5l per lb. This under‑statement of value in the relative BVF 6‑A declaration and also in the bill of entry has adversely affected the Government revenue to the extent of Rs. 1,095‑11‑0 and Rs. 423 as duty and sales tax respectively which you hereby directed to pay into this Custom House Treasury immediately. This under‑statement of value has also constituted an offence under section 39 of the S. C. Act liable to penal action under section 167 (9‑B). "The total C & F value of these goods as ascertained under section 30 of the S. C. Act comes to Rs. 4,6,39‑14‑0 against the declared C & F value of Rs. 1,570‑10‑

0. As such the import of goods worth Rs. 3,099‑4‑0 C & F in excess by way of under valuation as stated above is treated to have been made in contravention of the provisions of section 19 of the S. C. Act read with section 3 (3) of the Import & Export Control Act liable to penal action under section 167 (8) of the S. C. Act. You are therefore called upon to show cause within 7 days from the date of issue of this letter why penal action should not be taken against you under sections 167 (9‑B) and 167 (8) of the S. C. Act. If no explanation is furnished within the said period, the case will be decided ex parte. You may also state whether you wish to be beard in person or through a pleader." Thereafter, it transpires, the petitioner appeared before the Collector of Customs submitting a written statement and obtained time for appearing before the Collector. It further transpires that the petitioner did not subsequently appear before the Collector, with the result that on the 17th of October 1959, the Collector passed an ex parte order purporting to act under section 167 (8) and section 167 (9‑B) of the Act. A penalty of a sum of Rs. 3,000 was imposed on the petitioner. On receipt of this order the petitioner moved this Court and obtained the present Rule. The substance of the petitioner's case is three‑fold; In the first place, the petitioner. submits that the impugned order imposing a penalty on him under the aforesaid section is illegal inasmuch as the order is based upon an "acceptance" submitted by the petitioner and upon a misreading of what that "acceptance" contained. Secondly, it has been contended that the petitioner was denied the substance of a fair trial and that the imposition of the aforesaid levy was against the principle of natural justice, particularly because the petitioner was denied the right of present ing his case and of being heard in this behalf. It was contended that the notice was misleading as to the threatened penal action against the petitioner. Furthermore, the petitioner avers that against the impugned order passed by the Collector of Customs an appeal was preferred under the provisions of section 188 of the Act, which was summarily disposed of by the Central Board of Revenue. The order passed by the appellate authority, namely, the Central Board of Revenue, has also been annexed to the petition and reads as follows: "The Collector's order is correct in law and in fact. The Central Board of Revenue declines to interfere with the Collector's order." Here again the grievance of the petitioner is that he was not given any opportunity to be heard in respect of his appeal and that the said appeal was disposed of behind his back. Here again he was not given any opportunity of being heard in respect of his appeal. It thus appears that the main grievance of the petitioner is that he was to all intent and purpose denied an opportunity of a hearing when the Collector passed the impugned order imposing a penalty against him and that in respect of his appeal he was totally denied the opportunity of being heard. On behalf of the respondents an affidavit in opposition has been filed in this Court from which it is rather difficult to find what were the exact materials upon which the Collector of Customs acted in passing the impugned order, and, furthermore, from the said affidavit it does not clearly appear what materials the appellate authority, namely, the Central Board of Revenue, had before it. It seems that the Collector of Customs convicted the petitioner and imposed a penalty upon him while the investiga tion of the case was still in progress. It also appears that the Central Board of Revenue had before it some more materials than what were available to the Collector. A number of files, from the office of the Collector of Customs, Chittagong, were brought before this Court and various portions were shown to us and read in the presence of learned counsel for the petitioner in order to show that the Collector bad before him certain informations and documents upon which he acted. Mr. A. T. M. Mustafa, Standing Counsel, stated before us that the Collector had before him two kinds of materials. In the first place, he had reports by certain customs officials to the effect that the petitioner had, fn fact, purchased the aforesaid goods at the rate of 1.51 dollars per pound, and not at the rate of 1.51 dollar per pound. Secondly, the agent of the petitioner had himself made statements to some Customs authorities to the effect that the actual price paid by the petitioner for the said goods was at the rate of 1'51 dollars per pound and not at the rate of '51 dollar per pound at all. From one of the reports read to us from the said file produced in Court it appears that it is claimed by the customs officials that the original indent in respect of the said consignment for nylon‑laces was produced in the office of the customs department and that the said document was subsequently missing. The official who had seen the original Indent, is reported to have stated that the original indent would show that aforesaid goods were purchased at the rate of 1.51 dollars per pound and not at the rate of 1.51 dollar per pound. The question as to who produced the said indent and how it was subsequently lost, remains a mystery; it could not be gathered from all the papers brought before this Court. The order which was passed by the Collector states that the "acceptance" of the petitioner will prove the falsity of his declara tion that the said goods were purchased at '51 dollar per pound. The said acceptance has been obviously misread by the Collector. It was, therefore, argued that there was no basis for convicting the petitioner as the impugned order was based on the said acceptance alone. In the affidavit‑in‑opposition filed on behalf of the respondents there was no denial of the statements of the petitioner con tained in paragraph 16 of the said petition. The said paragraph 16 runs as follows: ‑ "The petitioner states that the respondent No. 1, has misread the original copy of acceptance (Annexure `C') which was forwarded to him. The said document mentions the price of the goods at '51 dollars per lb. and not 1'51 per lb. as stated in respondent No. 1's order." We were shown the original draft of the lawyer for the respondents and it appeared to us that it was through inadver tence that no reply to that paragraph was given in the affidavit in‑opposition, and, as such, we allowed the respondents to file a fresh affidavit‑in‑opposition and also allowed the petitioner to put in an affidavit‑in‑reply to such additional affidavit‑in‑opposi tion. The said affidavits are now before us. From the affidavits as well as from the various papers produced before this Court it appears that the respondent, Collector of Customs, had some materials before him for the passing of the impugned order, although such materials would amount to hearsay of the worst kind ; but !n conducting an enquiry under the aforesaid Act, the Collector does not act as a Court, but he undoubtedly exercises a judicial or quasi‑judicial function in this respect. He is not bound to conform to the provisi ons of the Evidence Act. In these circumstances, we cannot hold that there was no material or materials before the Collector of Customs upon which he could pass the impugned order. But in exercising a judicial or quasi judicial function, he decides a judicial Issue and must, therefore, act in a judicial spirit and manner in conformity to well‑recognised principles of natural justice. This brings us to the main point that has been urged before us, namely, that the petitioner was denied the substance of a fair trial and that he was not given a proper opportunity to be heard in his defence, either by the Collector or by the appellate authority, namely, the Central Board of Revenue. Mr. Mustafa has argued that the petitioner was given notice and was asked to show cause why penal action should not be taken against him under subsections (8) and (9‑B) of section 167 of the Act. He was given seven days' time for showing such cause and, thereafter the petitioner, in fact, appeared before the Collector of Customs and asked for time to make representations before him. The petitioner did not turn up before the Collector of Customs on the appointed day. In these circumstances, he cannot make any grievance to the effect that he was not given an opportunity of being heard. This argument would have been unassailable if the notice had not been misleading. The notice, in fact, caused a confusion between the assessment of "normal price" of the laces under section 30 of the Act and the imposition of punishment on the basis of such assessment. Mr. Mota, counsel, who appeared before us for the petitioner drew our attention to the notice, which was actually served upon the petitioner. He has argued that the said notice was misleading, in so far as the penal action proposed to be taken against the petitioner is concerned. It was submitted that in this respect the notice was misleading. He did not challenge In this petition the Imposition of a higher rate of duty upon an assessment of "normal price" of the said goods under section 30 of the Act This petition is confined to an attack upon the punishment imposed on the petitioner. The notice, it was submitted, primarily deals with the assessment of higher duty upon an investigation under section 30 of the Act. According to the respondents, the normal price of the goods, as ascertained under the said section 30, was found by the respondent to be Rs.4,669‑14‑0 as against the declared value of Rs. 1,570‑10‑0, and the value given by the petitioner was described as an "under‑statement". Upon the results of the investigation of the "normal price" under the said section 30, the petitioner was called upon to show cause why penal action should not also be taken against him under the aforesaid sections, and it was purely upon the ascertainment of the "normal price" under the said section 30 that the petitioner was sought to be punished for breach of the provisions of section 39 of the Act. It has again been urged before us that the notice did not convey to the petitioner the fact that the respondents had before them materials and informations which would show that the declaration of value made by the petitioner was false, as opposed to its being an "under‑statement" with reference to "normal price" as found upon an investigation under section 30 as aforesaid. The substance of this argument is that notice directed the petitioner to show cause as to why penal action should not be taken against him because as a result of investigation under section 30 of the Act it was found that the petitioner's valuation in the aforesaid declaration was an "under‑statement" and there fore, false. It was submitted to us that the petitioner, in pursuance of the notice, had asked for some time to make his representation before the Collector of Customs, with a view to challenge the assessment of the normal price of the laces under section 30 of the Act. It was asserted before us that the petitioner did not make such representation because he thought that it would serve no useful purpose to press anything further with regard to the im position of a higher assessment of duty based on the provisions of section 30 of the Act upon an ascertainment of the "normal price" of the goods in question. The petitioner, however, thought that the investigation under section 30 of the Act could not be foundation for a conviction under section 167 (8) or 167 (9‑B) of the Act for having violated the requirements of section 39 of the Act. It may briefly mentioned, in passing, that the said section 39 requires that the declaration in respect of customs duties should be correct and not false. Subsection (1) of section 39 reads as follows: ‑ "(1) If any person, fn connection with any matter of customs,‑ (a) makes or signs, or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declara tion, notice certificate or other document whatsoever, or (b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer, and such document or statement is untrue in any material particular, he shall be guilty of an offence under this section." We think that this contention of the learned counsel for the petitioner must he upheld. The notice which was served on the petitioner stated what the normal price of the said laces was upon an investigation under section 30 of the Act, but gave no indication whatsoever that there were materials before the Col lector of Customs upon which he could base a finding that the peti tioner had made a false declaration with regard to the value of the goods in question at the relevant time. It now transpires that the petitioner's agent betrayed him and gave evidence against him. It is further claimed by the customs department that the original indent was produced before the customs officials and that the said indent would show that the actual price paid by the petitioner for the said goods was at the rate of 1.51 dollars per pound and not at the rate of 1.51 dollar per pound, as mentioned in the said declaration. If such materials were before the Collector of Customs, then the notice which was actually served on the petitioner, not only did not convey the nature of such materials, but on the contrary, conveyed a misleading impression. The petitioner was directed to show cause why penalty should not be imposed upon him because the result of the investigation made by the customs department in pursuance of the provisions of section 30 of the Act showed that the "normal price" of the goods were much higher. This point can be further elucidated by referring to the pro visions of section 30 of the Act. With regard to the value of the imported goods the said section provides as follows:‑ "(1) The value of any Imported goods shall be taken to be the normal price that is to say, the price which they would fetch, at the time the bill of entry is delivered to the Customs‑Collector under section 86, on a sale, in the open market between buyer and seller independent of each other . . . . ." It is, therefore, clear that the Customs authority would be justified in imposing a higher duty for imported goods by ascertain ing the "normal price" of the imported goods according to the provisions of section 30 of the Act. Even if the actual price of the goods paid by the importer is much less than its "normal price" so ascertained under section 30 of the Act, a higher assessment of duty would become leviable. In other words, even if the declara tion given by the importer as to the value of the goods may be a true and correct declaration, the Customs authorities would be justified in computing its value on the basis of the ascertained normal price at the place at which the goods are sold at the time the goods are imported. The normal price under section 30 of the Act can be ascertained on an investigation as to what the actual price the goods will fetch in the country where they have been imported even though they have been actually purchased at a much lower price at the seller's country from where they have been im ported into the country of the buyer. On this point the Supreme Court of Pakistan had held that the result of an enquiry under section 30 of the Act cannot, by itself, be the basis for a conviction under sections 167 (8) and 167 (9‑B), read along with section 39 of the Act. In the case of Messrs Eastern Rice Syndicate and another v. Central Board of Revenue (P L D 1959 S C (Pak.) 364) the Supreme Court of Pakistan has held that a figure, which is related to market‑value at the port of entry in Pakistan, cannot, by itself, determine the true export price paid by the importer in the country of origin. It was also held that a charge for breach of the pro visions of section 39 of the Act read along with sections 167(8) and 167(9‑B) of the Act cannot be held to be established merely upon the basis of an ascertainment of "normal price" under sec tion 30 of the Act which have no relation whatsoever to the export price in the country of origin. Such a charge cannot be establish ed purely upon the basis of any higher price which the various Customs authorities may themselves choose to impose upon an investigation as to what the "normal price" should be or might be, and, therefore, "normal price" is, by itself, no measure whatsoever upon which the guilt of an importer in respect of the making of untrue statements for purposes of taxation or for purposes of the Import Trade Regulations can at all be determined. Cornelius, J. (as he then was) made the following observations in delivering the main judgment of the Supreme Court: "In two of these cases, they attempted to fix the "normal price." That figure is related to market value at the port of entry in Pakistan, and is of no relevancy in determining the true export price paid by the importer in the country of origin. A discre pancy between the "normal price" as fixed by the authorities, in complete honesty, and the declared invoice price must always exist. That is a proposition whose universal truth in all such cases can hardly be questioned . . . . ." " ..Certainly, the charge cannot be found established upon the basis of a "normal price" attained as required by section 30, which may have no relation whatsoever to the export price in the country of origin . . . . ." We are, however, not concerned with the question as to whether the results of an investigation may have the effect of placing before the Collector sufficient materials for prosecution for breach of the provisions of section 39 of the Act. It is, however, I patent that a person may make a true and correct statement of the price at which he purchased the goods at the country of origin and yet he may be liable for higher levy of customs duty upon an assessment of the normal price which the Imported goods may fetch in the country where the same have been imported. Thus, even a perfectly true and honest statement of the actual price at which the goods were bought may become an "understatement" within the meaning of section 30 of the Act upon an assessment of their normal price at the country where they are imported, and. such a statement cannot be characterised as "false" statement within the mischief of section 39 of the Act. In these circumstances, the notice served upon the petitioner is certainly misleading in as much as it might lead one to believe that it is upon the result of an enquiry under section 30 of the Act that he is threatened to be penalised for breach of section 39 of the Act. Such notice might lead one to a false sense of security that the purposed penal action cannot be taken against him under such circumstances. The idea of giving notice to show cause as to why a particular action should not be taken against him is to supply him with inteligible information as to the real nature of the case he is called upon to meet. The notice did not at all tell the c petitioner that there were materials before the Collector, which would show that the declaration made by the petitioner was, in fact, false. The notice merely quoted section 39, but did not say that according to the customs authorities the petitioner could be found guilty of having made a "false" statement, as distinguished from an " under‑statement " which was the expression used in the notice. It seems that the customs authorities had taken pains to conceal from the petitioner what materials they had before them, namely, the original indent which would show that the actual price paid by the petitioner was, In fact, much higher than what was shown In the said declaration and also the evidence of the petitioner's agent. The notice in itself deals primarily with the question of the imposition of higher duty upon the ascertainment of normal price under section 30 of the Act and it goes on to say that the investigation under the said section 30 makes the petitioner further liable to punishment under sections 167(g) and 167(9‑B) of the Act for breach of the provisions of section 39 of the Act. So far as the imposition of levy upon the assessment of normal price under section 30 Is concerned, the notice is a good notice, and to that extent it has not been impeached before us. But, in so far as it deals with the threatened action under the penal provisions of the Act is concerned, it is a misleading notice. Thus, it would be clear that the petitioner can legitimately make a grievance of the fact that he was not given a proper opportunity to meet the case against him because the aforesaid notice mislead him into thinking that nothing need be done with regard to the threatened action to impose punishment on the petitioner. The higher assessment of duty under section 30 of the Act has not been challenged before us. It is well‑settled that the Collector was discharging a judicial or a quasi‑judicial function in imposing said penalty upon the petitioner under the provisions of the relevant sections quoted above. No authority is needed for that purpose. It would be sufficient to mention the case of Messrs S. A. Haroon and others v. Collector of Customs, Karachi (P L D 1959 S C (Pak.) 177), decided by the Supreme Court of Pakistan. We may also usefully quote the following observa tions of S. A. Rahman, J. at page 201 of the report: "The Collector did not constitute a judicial Tribunal, though the proceedings before him were certainly of a judicial or at least quasi‑judicial character. The principles of natural justice could, therefore be legitimately invoked by the party concerned and a fair and full hearing had to be given before action could be taken which had the result of depriving the respondents of their property. Mr. Mustafa has contended on behalf of the respondents that the petitioner would have given sufficient opportunity to represent his case if he had asked for such opportunity. We think that the correct proposition of law is that whenever a duty is cast upon any Tribunal to exercise judicial or quasi‑judicial function, it becomes incumbent upon such Tribunal or body to act in accordance with well recognised principles of natural justice which also postulates that, if a penalty is imposed upon a person or his rights are invaded upon, he should be given a fair hearing. It becomes incumbent upon such Tribunal or body to confer a proper opportunity to such a person In order to enable him to meet the case against him. As to what amount to furnishing a proper opportunity to be heard would have to be decided according to the circumstances of each case. Here some of the facts stated above stare one in the face. The Customs authorities had, according to them the original indent of the petitioner which would show the actual price at which the petitioner had purchased the aforesaid goods. According to them, that document would establish that the petitioner was guilty of having made a "false statement" within the mischief of section 39 of the Act, as distinguished from an `'under‑statement' under section 30 of the Act. Furthermore, the Customs authorities had also the evidence of the petitioner's own agent before them. The authorities had been quite jealous in, procuring evidence against the petitioner even after the petitioner had obtained the Rule from this Court. In fact, the affidavit sworn by the petitioner's agent came into existence after tile issue of the present Rule. It is also patent that the customs authorities took good care to conceal the afore said materials from the petitioner. Mr. Mustafa has also argued that the Customs authorities were bound to conceal such statements. We do not think that he is right in advancing such a contention. Customs authorities may be bound not to disclose the identity of the informant upon whose information certain investigations are started ; but, if in a judicial or quasi‑judicial proceeding they have received any information as evidence and have relied upon such evidence, they cannot conceal the identity of the deponent and thereby deprive the petitioner of the opportunity of challenging his veracity. Then again, if the petitioner was told of the alleged original indent of the petitioner, he might have satisfied the Customs authorities that the said document was not a genuine document. In this case we have no hesitation in accepting the petitioner's case that he had all along proceeded on the footing that the assess ment of normal price of the laces under section 30 of the Act cannot by itself, be the foundation of a penal action under section 167 (8) or 167(9‑B) of the Act and, that, he did not therefore take further steps in this matter. We have also no hesitation in accepting the petitioner's statement that for the first time in this Court they have been apprised of the existence of the alleged original indent of the petitioner with regard to the purchase of the said goods and the alleged statements made by his agent. In these circumstances, it cannot be said that the petitioner was given an opportunity to meet the case against him. The circumstances of the case, on the contrary, establish that he was denied the substance of a fair trial. In any event, there can be no manner of doubt that the petitioner was given no opportunity of being heard with regard‑to the appeal that he had preferred under section 188 of the Act. We have already quoted the order passed by the appellate authority. It leas not been denied that the petitioner was not given a hearing in respect of this petition. It was merely contended that the Central Board of Revenue would have given an opportunity to the petitioner to be heard if he had demanded such an opportunity. We think that this is a misconception of the law on the subject. A right of appeal postulates a right of hearing with regard to the subject‑matter of the appeal. In this view we are supported by the decision of the Supreme Court of Pakistan in the case of the Federation of Pakistan and another v. Sardar Ali and others (P L D 1959 S C (Pak.) 25) where S. A. Rahman, J. at page 30 of the report has observed as follows: "The Central Board of Revenue, too disposed of the appeal, it seems, without fixing a date of hearing or giving an opportunity to the respondents of being heard. The right of appeal given by section 188 of the Act to a person aggrieved by a decision or order passed by an officer of Customs would become illusory if the appeal could be disposed of merely after perusing depart mental reports. The word `appeal' in itself implies a right of audience and we are constrained to hold, therefore, that the Central Board of Revenue also failed to discharge its statutory duty in deciding the appeal in the manner that it did. These were quasi‑judicial proceedings of which the substance of a fair hearing and opportunity for defence at the appropriate stage are essential incidents. We, therefore, find that the order passed by the Collector and the appellate order of the Central Board of Revenue cannot be sustained." In the case of Chief Commissioner, Karachi v. Mrs. Dina Sohrab Katrak (P L D 1959 S C (Pak.) 45), it has been held that where a statute gives a right of appeal it should be understood as silently implying, when it does not expressly provide, that the appellant shall have the right of being heard, and that it is a principle of natural justice that no one should be dealt with to his disadvantage or deprived of his liberty or property without having an opportunity of being heard and making his defence. Shahabuddin, J has observed at page 50 of the report as follows: "It cannot be disputed that it is a principle of natural justice that no one should be dealt with to his material disadvantage, or deprival of his liberty or property without having an oppor tunity of being heard and making his defence. That being so when a statute gives a right of appeal it should be understood as silently implying when it does not expressly provide that the appellant shall have the right of being heard." It is thus evident that tile appellate order passed by the Central Board of Revenue in this particular case is no order in the eye u law inasmuch as it was made in total disregard of the principles of natural justice, the appellate authority having denied the petitioner an opportunity of being heard. The appellate authority must itself furnish such an opportunity to the petitioner. No date was; fixed fur the presentation of the petitioner's case to the Central Board of Revenue. No opportunity was given to the petitioner to answer the materials upon which the petitioner was being punished. The appeal is a continuation of the original proceedings and the petitioner is entitled to have the impugned order set aside on the ground that he was given no opportunity to present his case before the Central Board of Revenue. Apart from anything else, on this ground alone, the petitioner is entitled to succeed before us. For the reasons stated above, we make the Rule absolute and quash the impugned order, namely, Order No. 760, dated the 11th of October 1959, by the Collector of Customs, Chittagong. The petitioner will be entitled to costs of this application, which we assess at five gold mohurs. SATTAR, J.‑I agree. K. B. A. Rule made absolute.