Recovery of foreign origin scrap

2013 PTD 74 Customs, Federal Excise and Sales Tax Appellate Tribunal Judicial Precedent

Ss.2(s), 16, 157, 156(1)(8) & (89), 168 & 179Imports and Exports (Control) Act (XXXIX of 1950), Ss.3(1) & 3(3)SmugglingRecovery of foreign origin scrap

Outright confiscation of such goods as owner of the goods failed to produce any proof with regard to legal import/lawful possession of goods so recovered, and local scrap which had not been mentioned in the recovery memo. was ordered to be released unconditionally and vehicle, used for transportation of smuggled goods was also confiscated which was released on payment of 20% redemption fine of the customs value

Appellant contended that original triplicate copies of IGM were provided/handed over to the seizing officer but he did not heed to these documents and returned back to the appellant; and department did not bother to verify such G.D. Nos. from the concerned quarter and denied the genuineness of the documents in surmise manner

Validity

Appellant produced copies of GDs wherein the seized scrap was stated to be legally cleared on payment of leviable duties

Department could neither accept nor reject the genuineness of the contents and simply showed their doubts that the GDs might be relating to some scrap legally imported and produced nothing in support of their contention

Petitioner established the link of a few days earlier legal import through notified route and stated that they imported the scrap and dumped in the stores and took the required quantity of scrap of their melting unit but on the way the customs squad seized the same without considering the fact that it was legally imported

Although the appellant produced copies of GDs as evidence to prove legal import of the seized scrap, it was not sufficient to prove the fact whether the seized scrap was the same as shown in the GDs

Department also could not prove that the seized scrap did not belong to the GDs produced

Question remained unanswered and the doubt still remained there

Onus of proof was on the department and the department failed to disprove the contents of the GDs

Order of First Appellate Authority was set aside by the Appellate Tribunal and ordered unconditional release of seized scrap to its rightful owner.

2013 PTD 15 Customs, Federal Excise and Sales Tax Appellate Tribunal Judicial Precedent

Ss.2(s), 16, 157, 178 & 156(1)(8), (89)Imports and Exports (Control) Act (XXXIX of 1950), Ss.3(1) & 3(3)SmugglingRecovery of foreign origin scrap

Outright confiscation of such goods as owner of the goods failed to produce any proof with regard to legal import/lawful possession of goods so recovered; and released the vehicle against payment of 20% redemption fine of the customs value

Owner contended that goods were locally purchased from the market on payment of handsome consideration against proper purchase receipts; and examination/verification of scrap was conducted and a representative by the Chamber of Commerce was nominated and goods were examined, and given their opinion; and purchase receipts were neither verified by the seizing officer nor by the adjudicating officer without any reason

Validity

Goods were admittedly purchased from local market and this fact had duly been verified by the Commission constituted by the Appellate Tribunal at the request of the parties

Commission after verification of purchase receipts from the shopkeepers, had also recorded statements of the shopkeepers

Report as well as statements recorded by the commission revealed that the goods were purchased from the local market

If taken into consideration that the goods in question were of foreign origin then one could think that there were hundreds of shops/dealers of scrap in the vicinity, where lot of scrap of vehicles imported/locally manufactured, was available having a number of mechanics/workshops, conducting boring etc, by changing the old unserviceable parts and replacing same by new one

Large number of foreign origin vehicles were imported into Pakistan every year and when an item of these vehicles become out of order during its plying on roads as well as accidents/deterioration, then definitely these were replaced and as such the old/useless spare parts/accessories were sold to the shopkeepers/scrap dealers

Old scrap dealers after collecting a huge quantity of different items segregate the same and sell it to different consumers

Shopkeepers, from whom the scrap was purchased, had given their respective statements to have sold the scrap to the appellant/ owner of goods

Scrap was purchased from local market against proper purchase receipts, duly verified by the Commission and prosecution/department failed to bring on record as to whether the scrap was serviceable or unserviceable as evident from recovery memo

Appellate Tribunal accepted the plea of the appellants as well as considering the examination/verification report of the nominee of Chamber of Commerce and Industry and Bar Members that the goods were of foreign origin but used in Pakistan being parts of legally imported vehicles and collection of shopkeepers/scrap dealers from the workshops and become scrap, which meant that the same were not smuggled one, it was collected by the shopkeepers/scrap dealers after the same was out of order and subsequently, sold to the appellants against proper receipts

Prosecution had nothing to say about any marks and number on the goods seized to show the foreign originality of the goods

Orders of the authorities below were set aside by the Appellate Tribunal and ordered to release the scrap to the appellants unconditionally

Appellate Tribunal, however, ordered that the goods be handed over to the appellants after cutting, piercing and de-shaping at the cost of the appellants

Redemption fine imposed on the vehicle was remitted because, the driver had loaded the scrap from the local market against proper bilties for melting purposes not concealed, the contents were mentioned in the Bill of Entry, which reflected that they had no intention of smuggling or to avoid taxes, as such, the prosecution had failed to prove the existence of their case as mentioned under S.156(1)(8) of the Customs Act, 1969.