Judgment on confiscation of non custom paid vehicles

PLJ 2003 Lahore 628 (DB) Present: tassaduq hussain jilani and asif saeed khan khosa, JJ. COLLECTOR OF CUSTOMS, LAHORE-Appellant versus AZEEM AHMED-Respondent Customs Appeal No. 333 of 2002, decided on 14.10.2002. (i) Customs Act, 1969 (IV of 1969)-- —S. 2(5)—Smuggled goods—Value of confiscated vehicles exceed Rs. 50,000 each and no Custom duty and taxes had been paid on them-Vehicles in question, thus, fell within ambit of smuggled goods. [P. 634] A (ii) Customs Act, 1969 (IV of 1969)-- —-S. 181-Option to pay fine in lieu of confiscated goods-Exceptions-Officer confiscating goods under Customs Act was empowered to give owner of goods, option in lieu of confiscation of goods and such fine as deems proper, in addition any duty or charges payable in respect of such goods- Board of Revenue, however, can specify goods or classes of goods qua which such option would not be given. [P. 635] B (iii) Customs Act, 1969 (IV of 1969)-- —S. 181-Confiscation of goods-Release of confiscated vehicles by Tribunal-Legality-Tribuanl has over looked point that option granted to owners in S. 181, Customs Act 1969, was subject to first Proviso of section which authorises Board of Revenue to specify goods or classes of good, where such option cannot be given. [Pp. 635 & 636] C (iv) Customs Act, 1969 (IV of 1969)-- —S. 156-Transfer of Property Act (IV of 1882), S. 41-Entitlement to protection under S. 41 of Transfer of Property Act 1882-Respondents claim to be entitled to protection under S. 41, Transfer of Property Act, 1882 was not tenable in as much as, there was nothing on record to indicate that he had purchased same from some one and even if he had purchased from first owner, he was not absolved from liability of Taxes, Customs Duties and Fine under law-Vehicles of respondent would thus, fall within mischief of S. 156 Clause 89 of Customs Act 1959--Onus of proof of a bona fide transaction was on a person from whose possession smuggled goods, had been recovered-Respondent failed to prove that he was bona fide purchaser, therefore, he was not protection to petition under S. 41 of Transfer of Property Act 1882, [P. 636] D (v) Customs Act, 1969 (IV of 1969)-- —S. 156—Confiscation of smuggled vehicles—Release of such vehicles by tribunal was not in accord with intent of law-Order of Tribunal relating to release of vehicles was set aside and that of confiscation of same was resorted. [P. 637] F (vi) Duty of Court- —Explicit provisions in S.R.O-Any expression of opinion by Court would tantamount to interference in policy making domain of competent authority! [P. 637] E Ch. Muhammad Zafar Iqbal and Mr. A Karim Malik, Advocates for Appellant. Mian Abdul Ghaffar, Sh Zia-ud-Din Qamar; Mian Abdul Qadoos, Mr. Saqib Saleem and Ch. Saghir Ahmed, Advocates for Respondent. Dates of hearing 3.10.2002 and 14.10.2002. judgment Tassaduq Hussain Jilani, J.--This judgment shall dispose of eighty seven Customs Appeals, i.e. Customs Appeals Nos. 333, 33$ to 348, 351 to 354, 356 to 366 and 419 to 421 and 462 (All filed at the Principal Seat of this Court) and Customs Appeals Nos. 420 to 442 and 444 to 476 (filed at ,- the Multan Bench of this Court) as they arise out of the similar Judgments passed by Customs Excise and Sales Tax Appellate Tribunal, Lahore vide which while allowing the private person's appeals, the Judgments of the Additional Collector Customs (Adjudication) were set-aside. 2. Facts in the instant Appeals briefly stated are that the Vehicles subject-matter of these appeals were impounded by the Anti-Smuggling Staff under the Customs Act. Applications were moved by the owners (those who were in possession of the vehicles for their release through summary adjudication and they offered payment of leviable duties and taxes. These applications were turned down by Adjudicating Officer as it of the view that said prayer could not be acceded to in the light of S.R.O. 1374 (D/98 dated 17.12.1998 and the Vehicles consequently were confiscated. The learned Appellate Tribunal through the impugned Judgment allowed private respondents' appeals and directed the release of the Vehicles to the respective owners on payment of fine equal of 100% of assessed duly/tax in lieu of confiscation, in addition to the payment of assessed duty/tax under the law as determined after allowing depreciation in accordance with C.G.O. No. 4/93 dated 7.7.1993. 3. The learned counsel for the appellants in Appeals filed by the Customs Department submitted that the learned Appellate Court has wrongly held that the Vehicles do not fall within the ambit of Serial No. 1 to S.R.O. 1374(I)/98 dated 17.12.1998; that in terms of Serial No. 4 of Table-Ill of the afore-noted S.R.O, the owners of Vehicles could claim exemption of confiscation if Customs Duties had been paid by or before the cut-up date mentioned therein i.e. 15th of March, 2000; that the impugned Judgment is violative of the mandate of Section 181 of the Customs Act; that no exemption could be availed of with regard to Goods in question after the target date and that the judgment has rendered as interpretation which cannot stand the test of legal scrutiny. 4. Learned counsel for the Private Respondents on the other hand, defended the impugned Judgment by submitting, that the Vehicles in question are not smuggled goods as defined in Section 2(s)(ii) of the Customs Act, that all the Vehicles are having Models prior to the year 1993-94, that they were duly registered by the Motor Registration Authority; that the respondents are bona fide purchasers, that,there is no Provision of Law requiring the Registered Owners to retain the documents pertaining to their import; that the Notification issued under Section 2(s)(ii) of the Customs Act i.e. S.R.O. 491(I)/85 dated 23.5.1985 does not include the Vehicles subject matter of these Appeals as smuggled Items; that for the first time such goods were declared as smuggled Items vide S.R.O. No. 997(l)/98 dated 14.9.1998 and as the Vehicles admittedly are of Models prior to the year 1998, the afore-referred Notification would not have retrospective effect to bring those Vehicles within the classification of Smuggled Goods. He further added that even if it is presumed that Vehicles were notified by the Central Board of Revenue as Smuggled Goods in terms of S.R.O. 49KD/85 dated 23.5.1985 those could not be confiscated in absence of a prior restriction on its import. In these circumstances, he lastly added that the impugned Order of the learned Appellate Tribunal is just and proper and a valid exercise of jurisdiction vested in it by law. In support of the submissions made the learned counsel relied on 1993 LT.R. 1 S.C. A.I.R. 1984 SC 1164 and 1993 P.T.D. (Trib) 12. 5. Learned counsel for the appellants in Customs Appeals Nos. 420 to 442, while defending the impugned judgment in so far as, it released the Vehicles subject to payment of fine took exception to the quantum of fine i.e . equal to 100% of the assessed duties and taxes in lieu of confiscation, by submitting that the Vehicles are very old, that the Tribunal in similar cases has been releasing the Vehicles without fine and merely on payment of duty and taxes leviable thereon. In this connection he placed on record a copy of the Order passed in Customs Appeals Nos. 1260(LB)/2001, 709(LB)/2001 and 1777 (LB)/2001. 6. We have heard the learned counsel for the parties and have given anxious consideration to the submissions made. 7. The primary issue involved in the instant Appeals boils down to interpretation of Section 181 of Customs Act and S.R.O 1374(I)/98 dated 17.12.1998, issued thereunder which reads as under:- FLXATION OF AMOUNT OF REDEMPTION FINE/PENALTY. Notification No. S.R.O. 1374/(I)/98, dated 17th December, 1998.-In exercise of the powers conferred by Section 181 of the Customs Act, 1969, and in supersession of the Customs General Order No. 19 of 1998, dated the 7th September, 1998, the Central Board of Revenue is pleased to order that- (a) no option shall be riven to pay fine in lieu of confiscation in respect of goods or class of goods specified in column (2) of Table-1 below except autoparts covered under Serial No. 3 of the said Table, in respect of which import general manifests have been filed on or before the 26th November, 1999. Which shall be allowed an option to redeem the same on payment of the fine equal to one hundred twenty-five percent of the ascertained value of the said autoparts, (underlining is ours) (b) the quantum of fine in lieu of confiscation shall be at the rate specified in column (2) below in case of goods, other than those specified in Tables I and II if imported into Pakistan by misdeclaration relating to the matters described in column (1) Customs Tariff and Trade Controls. Description Minimum redemption fine on the (duties and taxes exempted to be evaded) (1) . (2) (i) value subject to the condition that 100% the difference between the ascertained and declared value is more than thirty percent. (ii) Weight subject to the condition that the percentable difference between ascertained and declared weight is: (a) upto5 % Nil (b) more than 5% 100% (iii) quantity 100% (iv) origin 100% (v) physical description 100% (c) the quantum of fine in lieu of confiscation shall not be less than fifty percent of the ascertained value of the goods specified in column (2) of Table II; and (d) the quantum of fine in lieu of confiscation shall be such as specified in column (3) of Table III in respect of the goods specified in column (2) thereof. TABLE-I Sr. No. Goods (1) (2) 1. Smuggled goods (except goods mentioned in S. No. 4 of Table-Ill below) falling under clause (s) of Section of the Customs Act. 1969. (underlining is ours) 2. Goods imported in violation of Section 15 or notification issued under Section 16 of the Customs Act, 1969. 3. Goods imported into the country in breach of restriction or conditions imposed under Chapter 3 of the prevalent Import Policy Order, and goods mentioned in the Negative list of the prevalent Import Policy Order made under the Imports and Exports (Control) Act, 1950 (XXXLX of 1950). TABLE-II Sr. No. Goods (1) (2) 1. Dunnage wood and unserviceable ship stores imported in violation of the provisions of imports and Exports (Control) Act, 1950 (XXXLX of 1950) 2. Old and used spare parts and accessories subject to a maximum value not exceeding five percent of the value of the machinery, if imported alongwith the second hand plant and machinery used in the manufacturing of goods. TABLE-III Sr. No. Goods Extent of redemption fine on the ascertained value. (2) (3) (1) 1. Offending goods imported in the bales 25% of second hand clothings imported in violation of provisions of Imports and Exports Control Act, 1950 (XXXLX of 1950 2. Stock-lot goods imported in violation 15% of provisions of Imports and Exports Control Act, 1950 (XXXIX) of 1950, provided these assessed as prime qua lity goods. 3. Freely importable goods, other than vehi- 25% adval. cles all sorts, which are not originally imported for Pakistan but are sought to be cleared for horn consumption having been imported in contravention of the provisions of imports and Exports (Control) Act, 1950 (XXXLX of 1950). 4. Cars. 4x4 vehicles, trucks, tankers, prime movers Nil trailers, dumpers, tractors, buses, coaches vans , wagons and pick ups for which customs duties and taxes are paid by the 15th March, 2000. ( underlining is ours) 5. Vehicles imported under the Transfer of Res- 2% idence/Baggage. Scheme in violation of any con dition as envisaged in the Notification No. SRO 599(l)/93, dated the 17th July, 1993, certificate for release has been issued by the Ministry of Commerce. 6. Goods not covered under clause (c) of Rule 2 of Chapter 1 of the Passengers, Baggage Nil ( import ) Rules, 1998, notified vide S.R.O. 570(I)/98, dated the 12th June, 1999 brought by incoming passengers (accompanied or unaccompanied) in non commercial quantities for actual use and not intended for sale in market. 7. Old and used machinery parts or components 25% imported by the industrial importers for their plants, if not importable in terms of relevant Import Trade Procedure. 8. Imported scrap items which contain old and used Nil or serviceable component such as autoparts and compressors etc. If the same are allowed release after cutting,, pressing, piercing, breaking or otherwise deshaping to the satisfaction of the customs authorities on specific request of the importers subject to the condition that expenses incurred on such processes are paid by the importer 8. The expression "Smuggled Goods" is defined in Section 2(s) which is as under:- (s) "Smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon,- ( i ) .................... (ii) manufactures of gold or silver or platinum or plalladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed (fifty thousand rupees in value, or (iii) any goods by any route other than a route declared under Section 9 or 10 or from any place other than a customs station. 9. Admittedly, the value of each smuggled vehicles/goods subject matter of these Appeals exceeded Rs. 50.000/- and no Custom duty or taxes had been paid on them. The vehicles, therefore, Squarely fell within the ambit of the smuggled goods as defined under the Act. With a view to better appreciate the import and effect of S.R.O. 1374(I)/98 dated 17.12.1998, it would be in order if reference is made to the relevant Provision of Customs Act under which this S.R.O. had been issued, and the said Provision is Section 181 of the Customs Act which is reproduced as under: - "181. Option to pay fine in lieu of confiscated goods:- Whenever an order for the confiscation of goods is passed under this Act, the officer passing the order may give the owner of the goods an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit. Explanation.- Any fine in lieu of confiscation imposed under this section shall be in addition to any duty and charges payable in respect of such goods, and of any penalty that might have been imposed in addition to the confiscation of goods: Provided that the Board may, by an order, specify the goods or class of goods where such option shall not be given: Provided further that the Board may, by an order, fix the amount of fine which, in lieu of confiscation, shall be imposed on any goods or class of goods imported in violation of the provisions of Section 15 or of a notification issued under Section 16, or any other law for the time being in force." The afore-raferred Section empowers the Officer who has confiscated the Goods under the Act to give the owner of Goods an option in lieu of the confiscation of Goods and such fine as he may think proper, of/course in addition to any duty or charges payable in respect of such Goods. However, under this Section the Board of Revenue may specify the Goods or Classes of Goods qua which such option shall not be given. The S.R.O. under consideration, according to the Customs Department has created an exception in respect of the Goods subject matter of these appeals. It was argued that reading of Clause (a) Serial No. 1, Item-II of Table-I and Serial No. 4 of Table-Ill would clearly indicate that owners of these Vehicles were entitled to the option only if the Customs Duty and Taxes had been paid by 15th March, 2000. The learned Appellate Tribunal did not agree to this interpretation of the S.R.O. on the ground as under: "Instead of adopting some other legal instrument the CBR in its own wisdom decided to substitute Sr. No. 4 of Table-Ill of SRO. 1374 (D/98 vide S.R.O. 1355(l)/99 dated 16.12.1999, which was again substituted vide SRO. 1367 (i)/99 dated 22.12.1999 prescribing "Nil" fine if duty/taxes were paid initially .by 31.1.2000 and subsequently by 15.2.2000 and finally by 15.3.2000. The said amnesty scheme got implemented by allowing release of smuggled Vehicles only on payment of duty/taxes but without fine. The only change after 15.3.2000 would be that such Vehicles cannot be released without payment of fine in lieu of confiscation. However, it is against sanity to presume, what to talk of believing, that thereafter the Vehicles reverted back to the category of smuggled goods at Sr. No. 1 to Table-1 of SRO. 1374(I)/98 despite the presence of detailed mention of the description of goods in Col. 2 of Table-Ill at Sr. No. 4 and Sr. No. 5." 10. In holding that if the Customs and Duties are not paid on smuggled Goods by 15th March, 2000 (as contemplated in Sr. No. 4 Table-Ill of S.R.O. 1374(I)/98 dated 17.12.1998), the Vehicles could still be released but not without payment of fine in lieu of confiscation, the learned Tribunal has over-looked the point that the option which may be granted to owners by Para-1 of Section 181 of the Customs Act, is subject to the first Proviso of the same Section which authorizes the Board to "specify the Goods" or Classes of Goods where such option shall not be given". The SRO under consideration was admittedly issued under this Proviso and the finding of the Tribunal referred to in the preceding paragraphs has the effect of nullifying the intent of the Board expressed through the said S.R.O. The reference by the Tribunal to SRO. 739(I)/99 dated 12.6.1999 where certain Goods including Cars were excluded from Sr. No. 4 of Table-III of SRO. 1374(I)/98 dated 17.12.1998, is of no avail to the respondents as none of them claimed that the Vehicles in question were smuggled/imported after the issuance of this latter Notification. This Notification cannot have a retrospective effect to grant any benefit qua the Vehicles subject matter of these Appeals, regarding which admittedly no Custom Duty had been paid prior to 17th December, 1998. 11. The argument of the learned counsel for the respondents that" the owners of these Vehicles are • bona fide purchasers and entitled to protection of Section 41 of Transfer of Property Act, is not tenable for two reasons. Firstly, there is nothing on record to indicate that they had purchased it from some one and secondly even if they are purchasers from the first owners, it would not absolve the Vehicles from liability of the Taxes, Custom Duties and Fine under the law. The Goods of the respondents fall within the mischief of Section 156 Clause 89 of the Customs Act, 1969. The afore-referred argument looses sight of the mandatory Provisions of Section 187 of the Customs Act which puts the onus of proof of a bona fide transaction entirely on a person from whose possession a smuggled good has been recovered. It reads as under: "S. 187: Burden of proof as to lawful authority, etc. When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, licence or other document prescribed by or under any law for the time being in force, the burden of proving that he had such authority permit, licence or other document shall lie on him." The object of this Provision is two fold i.e. Firstly ; (a) when a person is charged with an offence under the Customs Act, the burden of proof is cast -upon him to show that he had the lawful authority to commit that act, Secondly; (b) when a person is found in 'possession of any goods the burden of proof is cast upon him to show that he was holding such goods under some lawful authority; permission or licence, etc. It was never disputed before the Adjudicating Officer that the Vehicles in question were smuggled goods. The respondents themselves offered to pay the Custom dues and taxes. These Vehicles, therefore, fall within the mischief of Column No. 11 of Table-1 read with Serial No. 4 of Table III of S.R.O. 1374(I)/98 dated 17.12.1998 which clearly lays down that no option shall be given to pay fine in lieu of confiscation for "Goods, Cars, 4x4 vehicles, trucks, tankers, prime movers, trailers, dumpers, tractors, buses, coaches, vans, wagons and pick ups for which custom duties and taxes are paid by the 15th March, 2000. Notwithstanding, any subsequent S.R.O. issued the fact remains that afore-referred Provisions remained intact and the respondents could be entitled to exercise the option with regard to the Vehicles only if they had paid the Custom Duties and Taxes by the target date. Reference made by the learned Appellate Tribunal to the Notification of S.R.O. issued from time to time by the Central Board of Revenue granting amnesty with regard to Vehicles would be relevant only if the SRO under consideration itself was vague and precedents were needed to explain the intent of the law maker. In the presence of an explicit Provision in the S.R.O. any expression of opinion by a Court would tantamount to interference in the policy making domain of the competent authority which exercise could not have been undertaken either by the learned Appellate Tribunal or by this Court in these proceedings. 13. For what has been discussed above, we are of the considered view that the option granted by the learned Appellate Tribunal to the Private Respondents while interpreting S.R.O. 1374(I)/98 dated 17.12.1998 is not in accord with the intent of the Law. The appeals filed by the Customs Department are therefore, allowed and the impugned Judgment is set aside. The appeals filed by the private appellants against the Customs Department are dismissed as having held confiscation to be in order, the question of quantum of fine becomes infructuous. 14. Before parting with this Judgment, we would like to add that it was brought to our notice during hearing that in the event of confiscation , the Vehicles would be auctioned and the State may not fetch as much revenue as it may collect if the Vehicles are released to the respondents subject to payment of fine, duties and taxes in lieu of confiscation. Finding on this aspect is not possible as it may not fall within the ambit of this Court's Appellate' Jurisdiction. The Chairman , C.B.R. may however, examine the desirability, of looking into this aspect and proceed accordingly. Copy of this judgment shall therefore, be sent to the Chairman, C.B.R. for information and any action that he may deem proper. (A.A) Order accordingly.