2013 P T D 59
[Balochistan High Court]
Before Muhammad Noor Meskan zai and Abdul Qadir Mengal, JJ
COLLECTOR OF CUSTOMS, QUETTA
Versus
CUSTOMS, SALES TAX AND CENTRAL EXCISE, APPELLATE TRIBUNAL -III,
QUETTA and another
Custom Appeal No.2 of 2005, decided on 3rd September, 2012.
Customs Act (IV of 1969) ---
----Ss. 194-C(4) & 196 ---Appellate Tribunal ---Single Member ---Pecuniary jurisdiction ---
Scope ---Valuation of smuggled items ---Seizure of smuggled goods and vehicle used to
transport the same by Customs authorities (original order) ---Collector Customs (appeal)
released the vehicle on payment of redemption fine (appellate order) ---Appellate Tribunal set
aside the original order ---Question was whether in such circumstances appellate order also
automatically stood annulled ---Contention on behalf of Collector Customs (a ppellant) was
that jurisdiction of Single Member of Appellate Tribunal to hear an appeal was Rs.100,000 at
the relevant time, whereas the valuation of seized goods exceeded Rs.500,000, therefore,
Appellate Tribunal was not competent to have passed the impu gned order ---Contention on
behalf of vehicle owner (respondent) was that Single Member of Appellate Tribunal was
competent to hear appeals where valuation of smuggled items did not exceed Rs.500,000,
and that his appeal was found competent by the Appella te Tribunal as valuation of seized
goods was Rs.361,000 ---Validity ---At the time of appeal in question Single Member of
Appellate Tribunal was authorized to hear matters involving amounts up to Rs. 100,000 but
this was subsequently amended to Rs.500,000 ---Amendment could not be given retrospective
effect and a jurisdictional defect could not be rectified on the same basis ---Valuation of
smuggled goods collectively exceeded Rs.500,000 ---Single Member of Appellate Tribunal
did not have the jurisdiction to adj udicate upon the matter at the relevant time ---Appellate
Tribunal had set -aside the original order but the appellate order still occupied the field ---
Impugned order of Appellate Tribunal was set -aside and case was remanded to the Tribunal
for decision in a ccordance with the law.
Messrs Aman and Amin Trading Co. through Proprietor v. Deputy Collector of
Customs, Appraising Intelligence Branch, Karachi 2008 PTD Kar. 459 rel.
Ch. Mumtaz Yousaf for Petitioner.
Ehsan Rafique for Respondents.
Date o f hearing: 24th July, 2012.
ORDER
MUHAMMAD NOOR MESKANZAI, J. ---By this order, we propose to answer the
law points involved in the instant reference/ application, filed under section 196 of the
Customs Act, 1969 against the order dated 3rd December, 2 004 passed by the Customs,
Excise and Sales Tax Appellate Tribunal Bench -III, Karachi. The following questions have
been proposed by the applicant for the opinion of this Court: --
"(i) Whether the learned Tribunal has failed to appreciate the facts broug ht on
record by the department and during the course of adjudication.
(i) Whether the learned Tribunal seriously erred in law in ignoring (sic) and
passed the Customs order -in-appeal.
(ii) Whether the findings of Honourable Appellate Tribunal were base d on mis -
reading and non -reading of record/ facts placed during hearing leading to the seizure
of huge quantity of smuggled scrap along with vehicles.
(iii) Whether the learned Tribunal failed to appreciate that the seizure of such huge
quantity of smugg led scrap were based on authentic information."
2. It is important to note that the learned Appellate Tribunal Customs, Excise and Sales
Tax Appellate Tribunal Bench -III, Karachi, has set aside the original order dated 6th July,
2004 passed by Collectora te of Customs, Sales Tax and Central Excise (Adjudication),
Quetta, whereas the appellate order dated 25th September, 2004 has not been set aside, this
situation also requires attention.
3. Prior to embarking upon to determine the legal points, it would be beneficial to have a
brief resume of the case. Facts relevant for the disposal of instant Reference are that the
Customs Staff Quetta, received information regarding smuggling of waste and scrap of Iron
and Steel from Taftan to Quetta by trucks. On rec eipt of above information on 25th May,
2004 at about 22 -30 hours, the Customs staff intercepted three trucks loaded with scrap near
'Kanak'. The drivers of the trucks failed to produce any documents about import of the
consignments loaded in the trucks. As such; the waste and scrap of Iron and Steel were taken
into custody and seized for having been imported unlawfully into country in breach of
provisions of Customs Act, 1969.
4. A show cause notice was issued on 10th June, 2004 to the owners of the seize d
goods/vehicles calling upon them as to why penal action should not be taken against them
and the goods/articles in question should not be confiscated. However, during course of
adjudication of the case, the Deputy Collector (Adjudication), Quet ta vide Letter No.V -
8(226) Cus/2004/4988 dated 16th June, 2004 requested the Assistant Collector (Preventive),
Quetta to constitute a committee in the presence of owner of the seized scrap to ascertain the
origin whether seized scrap is local or foreign, a s such, a committee headed by
Superintendent Customs, Dry Port (NLC), Quetta examined the scrap in presence of the
owners. The Committee after examination of the seized scrap, vide its report dated Nil held
that the whole scrap seized is waste and scrap of iron and steel and is of foreign origin. The
owners of the trucks were heard and eventually vide order dated 8th July, 2004, the Deputy
Collector ordered for confiscation of scrap as well as the vehicles carrying smuggled scrap in
favour of the State. How ever, an option under Section 181 of the Customs Act, 1969, was
given to lawful owners of the vehicles to redeem the same against fine.
5. The owners of the vehicles, preferred an appeal before Collector (Appeal) Quetta
which was disposed of by Customs, Excise and Sales Tax Appellate Tribunal and released
the vehicle on payment of redemption fine, vide order dated 8th July, 2004.
6. The record reflects that this reference was dismissed vide order dated 28th June, 2008
by this Court, however; on appeal t he Hon'ble Apex Court remanded the case vide order
dated 28th April, 2010 with following observation: --
"Our attention was drawn by learned ASC for the Appellate/Revenue to the memo. of
Reference/Appeal filed by the Collector of Customs, Quetta before th e High Court of
Balochistan, Ouetta, under section 196 of the Customs Act, 1969. We find that
number of questions were framed as question of law along with grounds therein. We
understand that the learned Division Bench of the High Court, while passing the
impugned judgment made general observations that no questions of law had been
raised by the appellant. It appears that the grounds (ii) and (iv) giving rise to the legal
questions in particular were overlooked by the learned High Court. The above
referred grounds are reproduced for clarity. --
(ii) The honourable appellate Tribunal erred in holding that checking by Customs
during transportation of those goods within the territory of Pakistan is beyond the
jurisdiction of Customs as it is an admitted fact t hat scrap is smuggling prone item
and this Collectorate has performed its legal duty in effecting seizure of the smuggled
scrap. There is no legal bar on Customs checking vehicles/goods within territory of
Pakistan. However, an administrative arrangement w as made by abolishing check
posts and establishing mobile squads functioning on specific information.
……………………………………………
(iv) It may also be added that the learned Member (Judicial) Customs Appellate
Tribunal has seriously erred in law while holding th at the provisions of section 177 of
the Customs Act, 1969 read with S.R.O. 118(I)/83 dated 12 -2-1983 has been related
in the subject case. Section 177 and any notification issued there under relates to
export of goods and is not relevant to the subject cas e, which involves transportation
of smuggled goods form Iran to Pakistan. The contention that the seized scrap was of
local gift is a subterfuge and ploy to justify carriage of smuggled goods in an area in
which it was seized namely near Kanak Noshki Quett a Road, where there is no
generation of scrap in view of non availability of industry there."
As recorded above, to our mind the above referred grounds raised question of law that
required determination by the learned High Court while dealing with Refer ence Application
under section 196 of the Customs Act, 1969.
In view thereof, we have no option but to set aside the impugned judgment dated 28 -
6-2008 of the High Court of Balochistan, Quetta and remand the case for re -decision inter
alia on the above g rounds as well as other questions of law that may be involved in the case
after granting an opportunity of hearing to the parties. Appeal accepted and disposed of as
above. "
7. Besides, in view of judgment of the Apex Court, the learned Standing Counsel
formulated an additional law point "Whether in view of the valuation of confiscated items,
the learned Single Member of Appellate Tribunal was competent to decide the matter keeping
in view the provisions of section 194 C -3(4) of the Customs Act, 1969?
Another point, though not agitated by the parties at bar, also cropped, as mentioned in
para No.2 of this judgment keeping in view the legal intricacy involved in the matter, the
same also requires consideration, which reads as under: --
"(ii) Whether b y mere setting aside the original order, the appellate order
automatically stands annulled?"
8. Since a crucial preliminary point i.e. the jurisdiction of single member qua valuation
of the smuggled items was involved, therefore, the parties confined the ir arguments to the
extent of jurisdiction.
9. We have heard Ch. Mumtaz Yousaf learned Standing Counsel for appellant, whereas
Mr. Ahsan Rafique Rana, Advocate represented the respondents.
Learned Standing Counsel submitted that the order passed by th e Appellate Tribunal
is contrary to law. It was maintained that there is an inherent defect in the impugned order i.e.
want of jurisdiction, on account of valuation. To substantiate the contention learned Standing
Counsel referred to Finance Act, 2004 an d stated that the jurisdiction of Single Member
to hear an appeal was/is Rs.100,000 (rupees one hundred thousand) whereas the valuation of
the seized goods exceeds Rs.500,000 (rupees hundred thousands), therefore, the appellate
Single Member of the Tr ibunal was not competent to have passed the impugned order.
Learned counsel for respondents controverted the arguments and submitted that in
view of section 93 of the Customs Act, appeal against the order in original does not lie if the
valuation of the smuggled items exceeds Rs.500,000 (rupees five lacs only), however, the
appeal filed by respondent was found competent as the valuation of the seized goods was
Rs.3,61,000 (Rupees three lacs and sixty one thousand only). The tribunal was competent to
hear the matter.
10. We have considered the contentions put forth by both the counsel for the parties and
gone through the record.
11. The point raised by the learned Standing Counsel is one that affects the very
jurisdiction of the Tribunal, therefore, at first juncture, we proposed to hear the arguments
qua the jurisdiction. We have given our anxious thought to the submissions made by the
parties on the point of jurisdiction. Though the appeal was filed by one of the owners of the
trucks but since as pe r the impugned order the valuation of the smuggled items collectively
exceeds Rs.500,000 (rupees five hundred thousands). It may be observed that the learned
Single Member decided the case in the year 2004. Till the year 2003, under Section 194 -C of
the Cu stoms Act, 1969, the learned Single Member was authorized to hear the matters
involving amount of "rupees one hundred thousands" but vide Act No.1 of 2003, an
amendment was made in section 194 -C, in subsection (4) whereby the words "one hundred
thousand ru pees was substituted to that of "five hundred thousand rupees". It would be
beneficial to reproduce the amendment referred to hereinabove: --
"(33) in section 194 -C, in subsection (4), for the words "one hundred thousand
rupees" the words "five hundred t housands rupees shall be substituted: ";
In view of above legal position, we are of the considered opinion that the Tribunal did
not had jurisdiction to adjudicate upon the matter but while deciding the appeal this legal
position was not adhered to.
12. No doubt now the Single Member is competent to hear an appeal involving the
valuation as mentioned in the subject matter, at the strength of amendment introduced with
effect from 1st July, 2007, because there is no cavil to the legal proposition that am endment
cannot be given retrospective effect and this jurisdictional defect cannot be rectified. Reliance
is placed on the judgment reported in 2008 PTD Karachi page 459 case titled as Messrs
Aman and Amin Trading Co. through Proprietor v. Deputy Collector of Customs, Appraising
Intelligence Branch, Karachi, relevant observations are reproduced as under: --
We have considered the submissions of the learned counsel and perused the material
placed on, record particularly the provision of section 194 -C(3)( 4) before its amendment vide
Finance Act, 2007 thereafter and noticed that the time of passing of impugned order the
learned Single member of Customs, Excise and Sales Tax Appellate Tribunal had no
jurisdiction to proceed with the matter while sitting as s ingle member of the Bench, as one of
the controversy involved in the appeal was about the dispute of valuation. Moreover, the
relevant amendment brought through Finance Act, 2007 has no retrospective applicability so
as to rectify such jurisdictional defec t in the impugned order dated 16 -4-2007.
This being the position and following our earlier view, contained in the order dated
30-8-2007 passed in Special Customs Appeal No. 53 of 2007, we answer the question No. (a)
in the negative and consequently set aside the impugned order dated 16 -4-2007 and remand
the case to the Customs, Excise and Sales Tax Appellate Tribunal Karachi for re -hearing of
the appeal. We may clarify that after the amendment in section 194 -C by virtue of Finance
Act, 2007 w.e.f. 1 -7-2007 the learned Single Member of the Tribunal has now the jurisdiction
to proceed with the appeal looking to the controversy involved therein."
13. Looking the case with this perspective, we have no doubt in our mind that the point of
jurisdiction raised by the learned Standing Counsel has got sufficient force and as such, is
bound to succeed. Secondly; the learned Appellate Tribunal has set aside the original order
whereas the appellate order still occupies the field. We are afraid that the order impugned
under such circumstances may not be redundant, thus; we answer the additional law points
formulated subsequent to remand order in negative by setting aside the impugned order dated
3rd December, 2004 passed by Customs, Central Excise and Sales Tax Appella te Tribunal
Bench -III, Karachi. Resultantly, the case is remanded to the Appellate Tribunal, for decision
in accordance with law.
MWA/86/Q Case remanded.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
let us know.