P L D 1962 Supreme Court 440 (PLP)

B. Z. KAIKAUS, J.‑

This appeal by special leave is directed against an order of the High Court of West Pakistan quashing in the exercise of certiorari jurisdiction the order of the Assistant Collector of Customs, Kohat, finding Qazi Ziauddin respondent guilty of an offence under section 167 (81) of the Sea Customs Act, 1878 read with section 9 of the Land Customs Act, and ordering the confiscation of the cloth seized by the Customs authorities from the respondent. The relevant facts are that on the afternoon of the 13th of April 1959, at about 5 p.m. Qazi Ziauddin respondent having purchased about 200 yards of cloth at Landikotal, a place situate 1n tribal area, was returning to Peshawar when he was stopped at the Jamrud barrier and the cloth which he had purchased was seized by the Customs Authorities. The Assistant Collector of Customs, Kohat, Issued a show‑cause notice to Qazi Ziauddin respondent on the 27th of April 1959, stating that he had been found in possession of cloth which had been imported into Pakistan‑ (1) in violation of a notification under section 3 (1) of the Imports and Exports Control Act, 1950, which by virtue of section 3 (3) of the same Act created a restriction under section 19 of the Sea Customs Act ; and (2) without payment of customs duty, and calling upon the respondent to show cause why he should not be convicted under section 167 (81) of the Sea Customs Act. It was alleged in the notice that on account of section 177‑A of the Sea Customs Act the onus of proving that the cloth had not been smuggled was on the respondent. In reply to this notice the respondent simply stated that the cloth bad been purchased for the use of his mother, sisters and nieces and was not meant for sale and therefore a lenient view of the matter may be taken. After a consideration of the reply of the respondent the Assistant Collector of Customs passed the impugned order confiscating the cloth on the 8th of May 1959. The respondent filed on the 23rd of August 1959, the writ petition out of which this appeal arises. In the writ petition he stated that he had purchased the cloth in an open market; that in Landi Kotal in a serai which was owned by the Govern ment there were a number of shopkeepers who were paying rent to the Government and who were selling cloth and other commodities openly and within the knowledge of the Customs Authorities as well as of those in charge of a Frontier Consta bulary Post which was situate in the semi itself; that no notice had been put up on the door of the serai prohibiting purchase of goods ; that the respondent had purchased the confiscated cloth at one of such shops and that the respondent having purchased goods bona fide, that is without knowledge of their being smuggled had not committed any offence. The respondents to the writ petition 9n the High Court were the Central Government and the Assistant Collector of Central Excise who had passed the order. Although in the reply filed on behalf of the Government and the Assistant Collector all the facts stated by the respondent in his petition which was supported by an affidavit were not admitted, no affidavit contradicting those facts was filed and at the time of arguments it was conceded that as a matter of policy no action was being taken by the Government in respect of the sale of smuggled cloth at Landi Kotal. It should be explained here that Landi Kotal Is in the Tribal Area. The Customs Post is at Torkham which is five miles from Landi Kotal and is at the end of the Tribal Area. The settled area begins from Jamrud. The pleas taken on behalf of the Govern ment and the Assistant Collector of Customs were: (1) that the cloth in dispute was smuggled, not having been brought into Pakistan through a Customs Barrier, and no customs duty having been paid on it ; and (2) that It was cloth manufactured to Japan and Imported from Afghanistan and it could not have been imported into Pakistan at all without a licence or permit from the Chief Controller of Imports and Exports. It was contended that by virtue of the presumption created by section 177‑A of the Sea Customs Act the respondent had properly been found guilty of an offence under section 167 (81) of the Sea Customs Act. Before proceeding further It is proper to state the legal and factual position as to the restrictions imposed on the import of the cloth in dispute. Under section 3 (I) of the Imports and Exports Control Act it is open to the Central Government to prohibit or restrict the import and export of goods of any description. By virtue of section 3 (3) of the same Act if there is a notification under section 3 (1) in respect of any goods then those goods shall be deemed to be goods of which the import and export has been prohibited or restricted under section 19 of the Sea Customs Act. Section 19 of the Sea Customs Act empowers the Central Government to prohibit or restrict the import into Pakistan of any goods by land or by sea. The Import and Export Control Act is not applicable to the Tribal Area because for application to the Tribal Area a notification by the Central Government is needed and there is no notification in respect of this Act. However, the Sea Customs Act and the Land Customs Act have been applied to the Tribal Area. The cloth in dispute had been manufactured in Japan and it bears the seal of the Customs Department of Afghanistan showing that it marl been imported into Afghanistan for home consumption. By a notification under section 3 (1) of the imports and Exports Control Act such cloth cannot be imported in Pakistan without licence or permit from the Chief Controller of Imports and Exports. Although the Imports and Exports Control Act does not apply to Landi Kotal, the effect of section 3 (3) of that Act is that the import of this cloth is deemed to be restricted under section 19 of the Sea Customs Act with the result that this cloth could not pass even through the Customs Barrier at Torkham without a licence from the Chief Controller of Imports and Exports, and therefore could not have been brought to Landi Kotal without such a licence. At the same time, as will appear froth Item No. 13 at p. 39 of the Customs Manual, by virtue of a notification under the Sea Customs Act the cloth could not have been imported into Pakistan without payment of customs duty unless it was proved to the satisfaction of the Customs Officer that this cloth had been exported frown Pakistan into Afghanistan and that no rebate of customs duty had been obtained with respect to it. It will be convenient to reproduce here section 167 (81) and section 177‑A of the Sea Customs Act, the former being the provision under which the respondent was convicted and the latter being the provision on which the appellant relies for proof of the case against the respondent :‑‑ "167 (81). Offences. Section of this Act to which offence has reference. Penalties. if any person knowingly, and with intent to defraud the Govern‑ ment 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 pos‑ session of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been un‑ lawfully removed from, a warehouse or which are chageable with a duty which has not teen paid or with aespect to the impor tation or exportation of which any prohibi tion or restriction is for the time being in force as aforesaid ; or if any person is in rela tion to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion of any duty charge able thereon or of any such prohibi tion or restriction as aforesaid or of any provision of this Act applicable to those goods. General. Such goods shall be liable to confiscation, and the person con cerned, in any such offence, shall be liable to a penalty not exceeding five times the value of the goods * * * * [except that in the case of the export of special goods, such goods shall be liable to confiscation ; and any person con cerned in any such offence shall, on con viction before a Court, be liable to imprison ment for a term not exceeding six years and not less thanone month, and shill also be liable to fine]. ["177‑A. Burden of proof.‑[(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that an act to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for tile time being in force by or under this Act has been com mitted in respect of such goods, or that there is intent to commit such act, the burden of proving that no such act has been committed or there was no such intent 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. (3) Every notification issued under subsection (2) shall be laid before the National Assembly as soon as may be after it is issued."] According to section 167 (81) a person is guilty if either he knowingly and with intent to defraud the Government of any duty payable thereon acquires possession or otherwise deals with any goods which are chargeable with duty which has not been paid or if he knowingly and with intent to evade any prohibition or restriction for the time being in force acquires possession of or in any way deals with goods which are subject to such prohibition or restriction. The Assistant Collector of Customs for proof of the ingredients mentioned in section 167 (81) relied upon the presumption continued in section 177‑A of the Sea Customs Act. The main question in this appeal is whether under the circumstances section 167 (81) could be invoked for finding the respondent guilty. A study of section 177‑A will reveal that this section is care‑ fully worded. A presumption with respect to the existence of certain facts can, under this section, arise only it' circumstances exist justifying a reasonable belief in the existence of those facts so that the practical effect of the section is only this that if `"' there is prima facie evidence of certain facts then those facts are to be presumed to exist. Cases decided by the High Court of West Pakistan show that there is a general apprehension as to the applicability of the first part of section 177‑A to every case of purchase or possession of foreign goods. This apprehension it appears to us is not well‑founded. The section requires reason able belief on the part of the person seizing the goods that an act to defraud the Government of duty has been committed. If a person purchases goods in an ordinary market then in the absence of any suspicious circumstances or some definite facts leading to that inference the Customs Officer is not entitled to a reasonable belief that the Government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside into Pakistan is that they come through the Customs Barrier and the duty payable is in fact paid. The presumption, therefore, with respect to any goods which maybe sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them. To consider the first part of the section in relation to this case can it be said that, under the circumstance, the person who seized the goods had a reasonable belief as to the commis sion of an act to defraud the Government of any duty payable on the goods? As already stated, goods are being sold by shopkeepers in a serai which is owned by the Government and which the Government has rented out to those shopkeepers. As a matter of policy, the Customs Officers take no action against the shopkeepers although It is known that on the goods which are being sold there duty has not yet been paid. They are goods of foreign origin and they would also be subject to the restriction imposed by the Imports and Exports Control Act, that is, a licence from the Chief Controller of Imports and Exports is needed for their import. If goods are allowed to be brought into Pakistan without payment of duty on account of instructions issued by the Government it is hardly possible to allege that the Government has been defrauded of the duty payable on the C goods by the person who brought the goods. into Pakistan. Nor can it be said that the person who was taking away the goods after their purchase at Landi Kotal had done any act to defraud the Government of duty for he maybe intending to pay the duty thereon. He may have purchased the goods at Landi Kotal just because the goods may not be available elsewhere. There is no Customs Barrier between Landi Kotal and the settled area, and the persons who purchase goods there are not stopped at any barrier for the payment of customs duty. Either they are just allowed to enter the settled area or the goods are seized. It would be proper to refer here to the undesirable situation that exists. All the purchasers are not being prosecuted or proceeded against because if that were so the sale of goods at Landi Kotal would stop. At the same time, the Government is not granting any general permission that all persons may without being molested in any manner purchase goods from Landi Kotal. The result is that at the option of the Customs Authorities action is being taken against a few out of those who purchase goods from Landi Kotal. We have not been informed of any criterion which is adopted for distinguishing one case from another, and the matter rests entirely on the arbitrary discretion of the Customs Authorities. We proceed now to consider the applicability of the second part of section 177‑A to the circumstances of this case. The goods in dispute being of Japanese origin and having come from Afghanistan needed a licence from the Chief Controller of Imports and Exports. There being no suggestion at all of any licence the Customs Officer would have a reasonable belief that they had been Imported in violation of a prohibition or restriction imposed by Government. It is true that the connivance of the Government extends not only to the non‑payment of duty on these goods but even to their being imported without a permit or licence. However, while in the case of non‑payment of duties there is an additional ingredient of fraud with respect to which there could be no reasonable belief, in view of the conduct of the Government, these considerations do not apply to evasion: of the restriction created on account of the notification under the Imports and Exports Act. The connivance of the Govern ment cannot be tantamount to a licence granted by the Chief Controller of Imports and Exports. It is clear, therefore, that there would be a presumption as to an act to evade a prohibition or restriction relating to the import of goods. This however does not conclude the matter. The presump tion raised by virtue of section 177‑A is only as to an act having been committed, and there is no presumption as to the person who committed the act. Even if the first part of r section 177‑A were applicable the respondent could not have been found guilty on the basis of the presumption alone, for there will be no presumption that it was he who committed an act t defraud the Government. So far as the second part of section 177‑A is concerned, this too raises a presumption only as to the commission of the act to evade a prohibition or restriction and not with respect to the person who committed the act. There is even a further difficulty in the matter. The presump tion is only that there has been an evasion, but the evasion is not the sole requirement of the corresponding part of section 167 (81). The words "knowingly and with intent to evade" are an essential ingredient of the offence in the second part of section 167 (81). The consequence is that, the presumption under section 177‑A even if it is raised with respect to a particular person is not sufficient for holding that person guilty. An act I may be committed in violation of a prohibition or restriction and yet it may not be committed "knowingly and with intent to evade " the prohibition or restriction. Section 177‑A does not by itself bring home an offence under section 167 (81) to the person in whose possession the goods are found. There has to be some further material to show that it is the possessor of the goods with respect to whom the ingredients mentioned in the section can be presumed. It may be that in a particular case the circumstances which create a reasonable belief in the mind of the officer who seizes the goods relate to a particular person so that the presumption too relates to that person. But barring such circumstances the presumption would be only as to an act and would not he sufficient proof of guilt as against the person in possession of the goods. The proper procedure for an application of section 177‑A would be that the officer who seizes the goods states the grounds of his belief In order that the reasonableness of the belief may be tested. The grounds on which the officer concerned entertains belief would be within his special knowledge and ft is only when he states those grounds that the question as to whether a presumption arises could be determined. In the present case we have assumed that the facts appearing from the record were the facts on which the belief was based. The Assistant Collector has found the respondent guilty on the strength of section 177‑A and It is clear that this conviction could not be maintained and was liable to be set aside in the exercise of certiorari jurisdiction. Reliance was placed by the learned Attorney‑General on the judgment of this Court in Messrs S. A. Haroon and others v. The Collector of Customs, Karachi and another (P L D 1959 S C (Pak.) 177) in 6upport of the proposition that onus lies on the possessor of the goods seized to prove payment of customs duty in respect of such goods. The decision in that case cannot be of much assistance in the determination of the present case because it dealt with the un amended section 177‑A and sections 167 (81) which ran as under "Item 81 : If any person is found in possession of, or carrying, remov‑ ing, depositing, bar‑ bouring, keeping, con‑ cealing or in any other manner dealing with, any goods chargeable with a duty which has not been paid or the importa‑ tion or exportation whereof is for the time being prohibited or restricted by or under Chapter IV of this Act. General Such goods shall be liable to confiscation and the 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 of less than three years, or to fine, or to both. "Section 177‑A. Burden of proof in certain cases :‑ Where in any proceedings under the provisions of this Act any question arises in respect of any goods as to whether‑ (a) duty has been paid or secured in respect of any goods ; (b) any goods have been lawfully imported or lawfully unloaded from any vessel (c) any goods have been lawfully loaded into any vessel or lawfully exported or lawfully water‑borne ; (d) any goods were lawfully brought into any place for the purpose of being loaded Into any vessel or exported ; then the burden of proof shall lie upon the person in whose possession the goods were found or from whose premises the goods were recovered or the person claiming the ownership of the goods." It will be observed that there is a material difference between the wording of the amended and the unamended provisions. The Ingredients of the offence under section 167 (81) have changed and the presumption raised as well as the requisites for the presumption are not the same. Under the unamended section 167 (81) mens rea was not needed, whereas under the amended section it is necessary that the act should be committed knowingly and with an intent either to defraud or to evade. The learned Attorney‑General contends that the presumption under the amended section is stronger than the original one. This argument is based on a misapprehension. It is true that the facts which are presumed by the amended section 177‑A are stronger in their nature but the requisite for the application of the section is also stronger. A reasonable belief has to be shown before a presumption is raised. In the written statement filed on behalf of the Government of Pakistan two preliminary objections to Writ Petition had been raised, the first being that the act of the Assistant Collector of Customs was not a judicial act and therefore no certiorari lay, and the second that the remedy by way of an appeal against the order of the Assistant Collector was open to the respondent and therefore a Writ Petition did not lie. At the time of arguments before the High Court however only one of these objections, that is, the objection relating to the order not being a judicial act was pressed. The High Court held that the order of the Assistant Collector finding the respondent guilty was a judicial act and therefore subject to certiorari. Before us the objection j as to the act not being a judicial act has not been put forward, but the other objection which was not argued before the High Court has been urged. One reason for not giving effect to this objection is that it was not argued before the High Court and should not be allowed to be argued now. But there is even a stronger reason why the objection should be repelled. In the very case which has been relied upon by the learned Attorney General, that is, Messrs Haroon and others v. The Collector of Customs, Karachi and another, it had been held that the failure to appeal against the order of the Collector was not necessarily a bar to the filing of a petition for certiorari for the objection as to there being an alternative remedy was not of such weight in the case of certiorari as it was in the case of mandamus, and if there was either absence or excess of jurisdiction or the impugned order suffered from illegality on the face of the record a certiorari could be granted even though the remedy by way of appeal had Not been availed of. The facts of that case were, similar to the facts of the present case. Here too the illegality of the impugned order is patent on the face of the record. There is no force therefore in this preliminary objection. We hold that a writ of certiorari has been properly issued. We dismiss this appeal but we make no order as to costs, because the respondent has not appeared. A.H. Appeal dismissed.