Punishment for offences

Prior to imposing penalty, adjudicating authority had to take into consideration the profile of importer and his line of business and relevant clause of S.156(1) of Customs Act, 1969

Indeed clauses of S.156(1) of Customs Act, 1969 defined pitch of penalties and other actions, but none of said clauses were mandatory in nature and it was left for discretion of adjudicating authority and court to impose penalty defined therein to the extent felt appropriate

Adjudicating authority was also empowered to let free person/company with a warning

In the present case, department had imposed huge penalty and also ignored the fact that Special Judge, Customs had also imposed a penalty upon the importer for pleading guilty for return of his passports, which was a vital instrument, desired for travelling

Department also lost sight of the fact that importer was not a habitual offender

Penalty so imposed should be for deterrence and not for crucifying the offender

Penalty which pinched the offender as harsh penalty served no purpose instead it frustrated the offender and he became desperate and hardened criminal

In judging the penalty, certain other factors such as circumstances in which it was committed, age and character of offender and injury to individual and society were required to be considered

Pitch of penalty had to correspond with the gravity of offence and according to the spirit of S.156(1) of Customs Act, 1969.

Licensing authority proceeding under Customs Rules did not enjoy any power or jurisdiction to invoke penal clauses of S.156(1) of Customs Act, 1969

Customs Rules, 2001 do not confer any power upon Licensing Authority or authorized it to revoke license, either conditionally or by imposing a specific penalty without making any reference to violation of any specific Rule or S.156(1) of Customs Act, 1969.

Ss. 156(1) (14) (50) (51) (58) (59), (61), (62) (90), 13, 32(1)(2), 79, 84, 86, 88, 97, 104, 116, 162, 163, 168(3) & 178

Punishment for offences

Removal of goods from private bonded warehouse

Penalty was imposed on the appellant on the ground that he had played pivotal role in evasion of customs, duty and other taxes as he settled the deal with the indenter for import of consignment; and in league with co-accused hired a premises which premises was used for illegal storage of bonded goods and he, keeping himself behind the screen managed all the affairs and committed the fraud; that he had neither joined the investigation nor had appeared before the Trial Court and that he had been declared absconder by the court of Special Judge Customs, Taxation Anti Smuggling

Validity

Assuming that the appellant guided in arranging the premises on rent as alleged in the show cause notice that did not in any manner whatsoever led to an adverse inference to be drawn against the appellant and that no element of mens rea or actus reus was involved or alleged in the show cause notice against the appellant

Penal provisions, in circumstances, were not attracted against the appellant, as it was nowhere alleged in the show cause notice, that the appellant removed the goods from the bonded warehouse or for that matter was privy to the alleged offence

Proprietor of the firm made it very much clear that the goods were actually removed by him only and rest of the parties to the show cause notice were having no linkage/concern with any activity carried out by him

Licensee of the private customs bonded warehouse, during the hearing had also admitted that the goods were removed by him and such submission had been incorporated in the show cause notice

In the presence of confessional statement given before the Special Judge, Customs and also in the written statement before the Collector (Adjudication) there remained no logic and reasoning to implicate and impose penalty on the appellant

Action on the part of Department imposing penalty upon the appellant was illegal, void ab initio, without lawful authority and jurisdiction, preposterous, based on wanton and callous behavior and as such was nullity in the eyes of law

Order-in-original was set aside to the extent of the appellant only by the Appellate Tribunal.

Department contended that Reference had been filed against judgment of Appellate Tribunal which was pending before the High Court

Validity

Admittedly, Appellate Tribunal remitted personal penalty and redemption fine and Department filed a Reference before the High Court • against judgment of Appellate Tribunal but it had not been suspended

Mere filing of appeal in higher forum did not automatically suspend the judgment of lower forum

Non-releasing of seized goods after judgment of Appellate Tribunal being unlawful and arbitrary was tantamount to maladministration under S.2(3) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000

Federal Tax Ombudsman recommended that Federal Board of Revenue direct the Collector of Customs, concerned to ensure implementation of the judgment of the Customs Appellate Tribunal and release the seized goods, as per law, without prejudice to the final outcome of the reference filed in the High Court.

Clause (14) of subsection (1) of S.156 of the Customs Act, 1969 was a penal clause and deals with punishment of an offence committed under S.32 of the Customs Act, 1969 for untrue statement, error in connection with any matter of customs through various modes stated therein

Clause (90) of subsection (1) of S.156 of the Customs Act, 1969 was a penal clause dealing with carrying, removing, deposing, harboring, keeping or concealing or in any manner dealing with any goods not being goods referred to in Cl.(89) of subsection (1) of S.156 of the Customs Act, 1969 (smuggled goods) by any person without any lawful excuse

No anomaly was committed by the adjudicating officer while stating both the penal clauses in the show-cause notice

Charge of smuggling had been levelled against the appellant

Objection was not based on sound footings substantiated by any evidence on record

Question as to "whether invoking of Cls.(14) and (90) of subsection (1) of S.156 of the Customs Act, 1969 simultaneously constitute an illegality detrimental/fatal to the outcome of the merits of adjudicating order" was answered in the negative.

Record showed that the problems relating to the vehicle initially created by the failure of Customs Authorities to comply with the Central Board of Revenue's instructions to sell tampered confiscated vehicles only to government/semi government institutions, were compounded due to glaring irregularities on the part of the complainant

Both the parties shared the responsibility of creating, aggravating and complicating the problems involved in the case

Desirable course would be that the tampered/confiscated vehicle was taken back by the customs authorities for its disposal only to a government /semi government departments/institutions etc. in accordance with the guidelines provided by the Central Board of Revenue

Precedent available in Federal Tax Ombudsman's decision and invoked by the complainant in support of his request for return of the vehicle was applicable after adding the amount of repairs statedly incurred by the complainant was finally worked out by customs authorities after verification of receipts as also the depreciation for intervening period

Depreciation could be worked out on account of its retention and use by the complainant in accordance with the rules of second hand vehicles being imported and assessed to import duties and taxes

Federal Tax Ombudsman recommended that the confiscated/tampered vehicle under reference be taken back by the Customs department; that the sale value and the repair and renovation charges be paid to the complainant after verification of the receipts of repair and renovation; and depreciating the value as per rules; that the time limit for registration of vehicles purchased in customs auction be standardized by FBR at a uniform level of sixty days on all Pakistan basis; that the responsibility of non-compliance of Central Board of Revenue's policy instructions about disposal of confiscated tampered vehicles be fixed; that the responsibility for the acts of maladministration involved in the case be fixed and those responsible be proceeded against under the Removal From Service (Special Powers) Ordinance 2000.

In cases of assessment under First Appraisement System the allegation of misdeclaration withers away, the penalty imposed under Cl.14 of S.156(1) of the Customs Act, 1969 and also stands remitted

When the allegation in terms of S.32A of the Customs Act, 1969 stands scraped, penalty under Cl.14A of S.156(1) of the Customs Act, 1969 also abates.

Outright confiscation of goods without any option to pay fine in lieu of confiscation whereas the consignment of other importers from the same source and supplier had been released, by the Department prior to the import of appellant's and even subsequent to adjudication proceedings

Validity

Definition of customs documents transpired that invoice and Bill of Lading had been defined as customs documents and they could not be discarded

Since, scrutiny of such documents and specifically the invoice submitted on the date of hearing it was established that identical goods supplied by the same source and origin had been released by the Department as such the Department could not now resile from same

Department was estopped by their own conduct and appellants were entitled to release of their goods on the same terms and conditions

Appellants had been discriminated by the Department by whimsical exercise of discretion as the Appellant's case was identical to other importers who had been allowed release of their consignments of identical machinery imported from India and as such the Appellants were entitled for the release of their consignment on same terms 'and conditions as had been applied to in other cases

Orders were set aside, appeal was accepted and the Department was directed by the Appellate Tribunal to release the consignment.

Appellant contended that duty and taxes in respect of goods which were neither available nor seized had been demanded in term of Cl. (43) of subsection (1) of section 156 of the Customs Act, 1969, whereas he was never charged under the said provision of law in the show-cause notice and as such the adjudicating authority had travelled beyond the scope of the show-cause notice which was not permissible under law; such provisions of law even otherwise were not applicable as the appellant never removed the goods from any customs area

Validity

Contention that duty and taxes in respect of goods which were neither available nor seized had been demanded in terms of Cl.(43) of S.156(1) of the Customs Act, 1969, which was not invoked in the show-cause notice was correct-Adjudicating Officer could not travel beyond the show-cause notice

Said clause even otherwise was not applicable, as it was the case of department itself that goods were illegally removed from the Port by third persons

Department was unable to show any document filed by the appellant for clearance of goods in question at Port

Nothing was available on record to establish that the appellant had ever visited the Port

Entire case of the department was based on the statement of third co-accused recorded by the Investigating Officer while they were in custody

Such statements were not admissible in evidence under the law.

Clause (43) of S.156(1) of the Customs Act, 1969 was not applicable so far as the appellant was concerned as admittedly he never got any goods cleared illegally from the Port.

Option was given to redeem the goods on payment of redemption fine equal to 30% of the customs value to be appraised and to pay penalty of Rs. 5,00,000

Validity

Order-in-Original was set aside by the Appellate Tribunal so far as it related to the demand of duty and tax in respect of goods which were neither available nor seized

Redemption fine was reduced to 15% of the customs value to be re-determined as ordered by adjudicating officer

Penalty was also reduced to Rs.2,00,000.

Proviso to the Explanation to S.156(1) of the Customs Act, 1969 clearly provides that in the case of accompanied baggage, the offence shall be deemed to have been committed when baggage containing prohibited/ restricted goods entered the customs area

Once baggage foreign currency, which was skillfully concealed inside the zip pockets of one of the two suit-cases of the P Pockets avoid detection, was brought by the passenger inside the customs area, which was an admitted fact, rather material evidence, the offence of attempt to smuggle was deemed to have been committed by him

Under S.156(2) read with S.187 of the Customs' Act, 1969, the burden of proving that no such act had been committed or there was no such intent shall be on the accused passenger, from whose possession the foreign currency, being a specified and notified item under S.2(s) of the Customs Act, 1969, was seized inside the customs area.

Proviso to explanation to S.156(1) of the Customs Act, 1969 provides that in the case of accompanied baggage or any un-manifested goods meant for export, the offence shall be deemed to have been committed when such baggage or goods enter the customs area or delivered to the carrier or the conveyance

By virtue of such amendment incorporated therein, the bringing in or taking out of any prohibited or restricted goods to or from the customs area by any incoming or outgoing passenger will fall within the ambit of attempt to smuggle.

Where it was found that goods not declared were found concealed in, in such a case not only the goods not so declared but also the goods so declared would also be liable to confiscation.

Appellant advanced plea that in place of outright confiscation, the appellant should have been allowed to get the goods cleared after payment of fine and other dues vide S.R.O. 487(I) of 2007, dated 9-6-2007

Validity

Such facility was not available as there was no authorization from the competent Ministry

Outright confiscation of good§ imported by the appellant was justified under the law.

Confiscation of truck alleging that the smuggled goods were being transported through the truck and the " bilties" were fictitious as the truck driver had made a statement that he was owner of the truck and the petrol and as per report it was not a petrol of Pakistani origin

Validity

Truck could not automatically be connected with the carrying of smuggled' goods unless a proper link was proved

Department had tried to set up a case that driver was the owner and had transported the goods intentionally

It had all along been one M.R., who had been claiming himself as the attorney of the owner of the truck and it was not proved that the proprietor of the truck was intentionally engaged in smuggling of the petrol

By a composite order one H.A.K., the owner of the truck was substituted as the appellant and the appeal would be read as H.A.K. through M.R., the attorney and the appeal was accepted and the order-in-original and order in appeal were set aside to the extent of confiscation of the truck

Customs authorities were directed to release the truck in favour of H.A.K. subject to his furnishing surety bond to the tune of Rs.10,00,000 that he would hand over the truck to any other lawful owner, if declared by a competent civil court.

Department contended that packing list provided by the importer showed the marks and numbers as Rani, Ferozi, Mehandi, Jambli, Rama, Devdas etc. all such nomenclatures not only depict but amply substantiate the goods to be of Indian origin and import was in contravention of Import policy

If importers were allowed to re-export the goods, it would encourage them to perpetrate such like contravention, unless there was any deterrence, the irresponsible importers will not be deterred

Validity

Department had given much importance to the labels as Ferozi, Rani, Jambli, Devdas and Rama and concluded that the Polyester must be of Indian Origin; there were some other labels named as Red, Lemon, Fanta, Green, Gold, Maroon, Pink, Tomato and Cofee

If, the labels were to be believed it did not mean that the fibre was of English origin by virtue of labels

Similar consignment had been allowed to be re-exported and there should be no discrimination

Reasons given by the Department were mere conjectures and surmises

Importer could not be blamed on hypothetical reasons

Consignment should have been released

Re-export was allowed as ordered by the First Appellate Authority and the departmental appeal was dismissed by the Appellate Tribunal.

Confiscation of vehicle without obtaining expert opinion of Forensic Science Laboratory to confirm its allegation that the chassis number of the vehicle was not original/genuine

Release of vehicle

Validity

Department should have got the vehicle tested by Forensic Science Laboratory to ascertain whether the chassis number found on the vehicle was original or not

Department failed to establish that the chassis number was not genuine

Order was passed by the First Appellate Authority after verification/confirmation of auction of vehicle carrying chassis number by the government department

Department's contention that auctioned vehicle as shown in the auction voucher was Hino truck, whereas the vehicle in question was "Prime Mover Machine" did not carry much weight as both these terms were generally used for such vehicles and in the absence of solid evidence/proof that the chassis number of the vehicle was not genuine, such argument was not tenable

No illegality or infirmity in the order was found which was upheld by the Appellate Tribunal and Departmental appeal was rejected being without merit.

Confiscation of vehicle on the ground that chassis number was self-punched/grinded without testing from Forensic Science Laboratory

Validity

Entire case of the department was based on the premise that chassis number carried by the vehicle was self punched/grinded and auction voucher produced by the vehicle owners in support of their contention that the same had been purchased in auction was not relevant while according to certificate of manufacturing company chassis numbers of the vehicle were punched manually in their plant and for some time in the past even without or with incomplete model numbers

Department, in such a situation, should have got the vehicle tested by Forensic Science Laboratory to ascertain whether the chassis number found on vehicle was original or not

Department failed to establish that the chassis number was not genuine

Contention that auction vehicle as shown in the auction voucher was the truck, whereas, the vehicle in question was "Prime Mover Machine" did not carry much weight as both these terms were generally used for such vehicles and in the absence of solid evidence/proof that the chassis number of the vehicle was not genuine, the argument was not tenable

Order of First Appellate Authority in respect of release of vehicle was upheld and the appeal of the depart­ment was rejected by the Appellate Tribunal being without merit.

Confiscation of excess quantity of goods weighing 3.5 kg involving duty and taxes with option to redeem the goods on payment of fine equivalent to 100 % of the duties and taxes attempted to be evaded in addition to duty and taxes payable

Validity

Quantity of 3.5 Kg of goods admittedly was found in excess of quantity declared in the bill of entry which was because of some mistake on the part of foreign supplier

Supplier, rectified the mistake by issuing a revised invoice and advice for necessary amendment in the letter of credit

Importer was entitled to import goods at concessionary rate of 5 % duty in terms of form `S' issued by the Central Board of Revenue

Amount of duty worked out was only Rs.924 which was too. small to induce an industrial importer to indulge in wilful misdeclaration

Order of confiscation of goods was set aside by the Appellate Tribunal with the direction that goods may be released on payment of duty and taxes at the rate provided in the relevant concessionary S.R.O. and in accordance with the conditions/quantities provided in the Form `S' issued by the Central Board of Revenue.