PLJ 2013 Tax Cases (Kar.) 119 (DB)
Present: Aqeel Ahmed Abbasi and Sadiq Hussain Bhatti, JJ.
MEMBER JUDICIAL, CUSTOMS APPELLANT TRIBUNAL,
and another--Respondents KARACHI
Special Customs Reference Application No. 58 of 2010, decided on 29.1.2012.
Customs Act, 1969 (IV of 1969)--
----Ss. 159(1), 168, 187 & 196--Reference to High Court--Vehicle Registered with M.V.R.A. before 14 years ago-- Seizure of such vehicle alleged to be smuggled one on the ground that out of the documents produced by its owner (i.e. original Registration Book, copy of BUI of Entry, copies of documents regarding clearance of men vehicle from Port and receipt showing payment of duty and taxes along with Bill of Lading), copy of Bill of Entry did not pertain to said vehicle--Order-in-original passed by Adjudication authority upheld by Appellate Authority and the Tribunal--Validity--Registration Authority had duly verified genuineness of registration and issuance of registration book in respect of such vehicle to its owner--Authority itself had failed to ascertain as to whether import documents produced by owner were fake or irrelevant--Authority had not verified as to whether registration of such vehicle by registration authority was in accordance with law or not--Tribunal in earlier round of litigation had opined on basis of same facts and record that owner had successfully discharged burden of proof by producing relevant import documents, but authority had failed to prove such vehicle to be smuggled one--Tribunal while passing impugned order had discarded such documents produced by owner and based its findings upon surmises and conjectures--Authority had failed to discharge burden of proof, which shifted thereon in terms of S. 187, Customs Act, 1969 on production of such documents by owner---High Court accepted reference application. [Pp. 123, 128, 129 & 130] A & B
PLD 1996 Kar. 68 rel.
Mr. Dilharam Shaheen, Advocate for Applicant.
Mr. Ghulam Hyder Shaikh, Advocate for Respondents.
Date of hearing: 13.12.2012.
Aqeel Ahmed Abbasi, J.--Through instant reference application the applicant has impugned the order dated 6-1-2010 passed by the Customs, Excise and Sales Tax Appellate Tribunal, Bench-I, Karachi in Custom Appeal (New) No. K-154 of 2009, (Old No. K-472 of 2006), whereby the appeal filed by the applicant was dismissed by holding that the applicant has failed to discharge his initial burden of proof to establish that the impugned vehicle was legally imported and following questions of law have been formulated, which according to the learned counsel arise from the impugned order:--
(1) Whether learned Member Judicial Appellate Tribunal Bench-1,
, has seriously erred in law and failed to understand that the duty and taxes amounting to Rs.505,057 were rightly paid against Toyota Land Cruiser Jeep bearing Registration No. BC-4745 which was conformed at original stage by the Adjudicating Authority? Karachi
(2) Whether vehicle of 1990 Model registered with Motor Registration Authority,
Civic Center, on 29-6-1996 and whose Motor Vehicle tax is paying accordingly is liable for confiscation which was seized from the possession of third purchaser? Karachi
(3) Whether Vehicle Registration No. BC-4745 registered with Motor Registration Authority, Civic Center, Karachi, in 1996 is liable to out-right confiscation in terms of clauses (8), (77), (89) and (90) of sub-section (1) of Section 156 of the Customs Act, 1969 in which seizing agency could not prove charge of smuggling?
(4) Whether the Learned Member Judicial Customs Appellate Tribunal Bench-1 has failed to properly read the evidence available on record provided by the appellant under Section 187 of the Customs Act, 1969 and shift burden of proof on the Respondent No. 2?
2. Brief facts as recorded by the Appellate Tribunal are that the officials of the Respondent No. 1 received some credible information that the impugned vehicle Toyota Land Cruiser Jeep bearing Registration No. BC-4745 has been registered with Motor Registration Authority,
on the basis of irrelevant import documents and was plying in violation of the law, therefore, on 31-8-2005 it was intercepted when it was being driven by one Muhammad Ibrahim son of N.K. Muhammad. He produced Registration Book No. NC-457239 at the time of its impounding and undertook to produce import documents later on. When the Respondent No. 1 approached the Excise and Taxation Officer for supply of the copies of the import documents it was informed vide letter dated 26-11-2005 that as per record one Muhammad Aslam Sheikh son of Sheikh Muhammad Younus was the registered owner of the vehicle, however, no import documents were supplied by the Excise and Taxation Officer. Then Muhammad Ibrahim approached the Directorate and submitted original registration book, photocopy of the Bill of entry, IGM No. 965/91 dated 3-6-1991, Index No. 69, Cash No. 4010 dated 8.6.1991 along with Bill of Lading No. NYKS-173024339 dated 14.5.1991. Photocopy of import authorization dated 4-6-1991, photocopy of miscellaneous other documents regarding clearance of the Jeep from port and authority letter dated 21-12-2004 issued by Muhammad Aslam Sheikh, the owner in favour of Muhammad Gul, the applicant. Respondent No. 1 sent the import documents to the concerned, department of customs for verification on 24-9-2005, in response whereof the Principal Appraiser (Appraisement) Collectorate informed that the Toyota Land Cruiser Parado bearing Chassis No. LJ78-0008007 was not cleared from Customs House and the said Bill of Entry was fake/fabricated. On the basis of said report it was prima-facie clear that the impugned vehicle was smuggled in the country and thereafter registered with Motor Registration Authority on the basis of fake import documents, therefore, the same was seized under Section 168 of the Act for violation of Sections 2(s) and 16 of the Act and a notice was issued at the given address to Muhammad Ibrahim, and Sheikh Muhammad Aslam son of Sheikh Muhammad Younus. The matter was adjudicated and the impugned vehicle was confiscated vide Order-in-Original No. 147 of 2006 dated 27-9-2006 as mentioned in its schedule at Serial No. 3, on page 3. However, the owner of the vehicle was given an option under Section 186 of the Act to redeem the same against redemption fine 30% of the assessed value of the vehicle in addition to duty and taxes leviable thereon in term of S.R.O 574(I)/2005 dated 6-6-2005 as amended S.R.O. 179(I)/2006 dated 2-3-2006. Against the said order appeal was filed but the same was dismissed by Collector (Appeals) against which order, the applicant filed appeal. Karachi
3. Being aggrieved by the order of dismissal passed by Collector (Appeals), the applicant preferred an appeal before the Customs Appellate Tribunal, which was initially allowed vide order dated 15.2.2007 in favour of the applicant. The department filed reference before this Court, which vide order dated 11-4-2008 in Special Custom Appeal No. 396 of 2007 dismissed the departmental reference, whereafter an appeal was filed before the Hon'ble Supreme Court i.e. Civil Appeal No. 739 of 2008, which was disposed of vide order dated 10-2-2009 setting aside both the orders/judgments and remand the appeal to the Tribunal to decide the same afresh. After remand of the appeal by the Hon'ble Supreme Court, the Customs, Excise and Sales Tax Appellate Tribunal, vide impugned order has dismissed the appeal of the applicant against which instant reference has been filed.
4. Learned counsel for the applicant has submitted that the subject vehicle in the instant reference application was imported in the year 1991, whereas the applicant is the 4th owner, who has purchased the said vehicle after proper verification from the Registration Authority. Whereas, per learned counsel, the respondents, after a lapse of about 14 years on 31-8-2005 intercepted the subject vehicle, whereafter it was seized under Section 168 of the Customs Act, 1969, on the allegation that the subject vehicle is smuggled one. Per learned counsel, the entire documents of the subject vehicle were produced before the Adjudicating Authority, which were sent for verification and no discrepancy was found in this regard. Wherefter, per learned counsel, the respondents have produced another bill of entry, which is neither signed nor stamped, and alleged that actually, the import was made by the present applicant on the basis of said Bill of Entry, however, the particulars in GD do not tally with the particulars of the seized vehicle. It has been contended by the learned counsel for the applicant that the import documents produced by the applicant a/w paid cash voucher are genuine which contain the same chassis number and engine number as of the subject vehicle, whereas, GD is also duly stamped and signed and reflects that the amount of custom duty and taxes in respect of subject vehicle were duly paid by the importer in the treasury. Per learned counsel, in terms of Section 187 of the Customs Act, 1969, once the applicant has discharged his burden of proof, the onus was shifted upon the respondents to dislodge the claim of the applicant and to establish the case of smuggling in accordance with law, and not to victimize the applicant on false and flimsy grounds. It has been contended by the learned counsel that, these facts and the evidence were thoroughly examined by the Appellate Tribunal in the first round of the litigation, whereafter finding on facts was recorded and it was held that the documents produced by the applicant in respect of the subject vehicle including the import documents are not fake, and the case against the applicant was dismissed. Whereafter, the respondents filed a reference before this Court, which was also dismissed by a Division Bench of this Court. As regards the order of Hon'ble Supreme Court passed in the instant matter, it has been submitted by the learned counsel that by consent of both the parties, the matter was remanded to the Customs, Excise and Sales Tax Appellate Tribunal with the direction to decide the same after providing complete opportunity of being heard to both the parties to present their case, whereas no finding was recorded with regard to validity or otherwise, of the order passed by the Customs Appellate Tribunal or the order of this Court, in the earlier round of proceedings. It is contended that the Appellate Tribunal, on same set of evidence, has reversed its earlier finding, which was earlier recorded after, appraisal of the entire facts and the evidence. Per learned counsel, such finding of facts has been illegally reversed without assigning any valid reasons. Per learned counsel, in view of peculiar facts and circumstances of this case and the documentary evidence produced by the applicant in the instant matter, the case of the respondent against the applicant is based on mala fides, and the same is devoid of any substance. It has been contended that no case of alleged smuggling or evasion of duty and taxes against the applicant has been made out, therefore, this Court may allow instant reference application and set aside the order passed by the Appellate Tribunal.
5. Conversely, learned counsel for the respondent has submitted that the claim of the applicant was based on fake documents, whereas as per bill of entry produced by the respondents, it appears that the applicant has imported two vehicles and got them cleared by filing bogus bill of entry. Per learned counsel, the applicant could not dis-charge onus of proof in terms of Section 187 of the Customs Act, 1969, whereas on the basis of fake documents the registration of the subject vehicle has been obtained by the applicant. Per learned counsel, since the finding is recorded on facts, therefore, no question of law arises from the impugned order, which may require any opinion by this Court.
6. We have heard both the learned counsel and perused the record. From perusal of the record and the questions proposed by the applicant in the instant reference application, it appears that the controversy in the instant case revolves around the determination of the fact as to whether the subject vehicle was lawfully imported vehicle upon which duty and taxes were paid and further as to whether the applicant in the instant case by producing the above referred documents before adjudication authority has successfully discharged his onus to prove that the subject vehicle is not smuggled, in terms of Section 187 of the Customs Act, 1969. The precise case of the applicant is that the impugned vehicle was originally imported by the owner namely Muhammad Anwer in the year 1991 after having paid all duty and taxes. It was subsequently purchased by one Muhammad Aslam Sheikh thereafter the subject vehicle was duly registered with the Registration Department. Thereafter, one Muhammad Ibrahim approached the Directorate and submitted original registration book, photocopy of Bill of Entry, IGM No. 965/91 dated 3-6-1991, Index No. 69, Cash No. 4010 dated 8-6-1991 showing payment of Rs.505057 along with Bill of Lading No. NYKS-173024339 dated 14-5-1991. It appears that none of these documents have been disputed except the Bill of Entry, which according to the respondent does not pertain to the subject vehicle.
7. Before the Customs Appellate Tribunal, the respondents have argued that since no import documents of the subject vehicle were available with the Motor Registration Authority, Karachi nor the documents produced by the applicant were pertaining to the subject vehicle, therefore, the applicant failed to discharge the burden of proof that subject vehicle was lawfully imported after payment of duty and taxes. It was the case of the respondents that as per record there were two import permits in favour of one Muhammad Anwar in respect of Chassis Nos. LJ79-0002924 and LJ-78-0008007, whereas the particulars of import vehicle bearing Chassis No. JL-78-0008007 allegedly imported vide Bill of Entry, IGM No. 965/91 dated 3-6-1991, Index No. 69 produced by the applicant do not tally with official record.
8. The Customs Appellate Tribunal in the first round of litigation, while deciding the appeal has held as under:--
"6. Rival parties have been heard. Case record seen. It is evident from the record:
(A) that the vehicle was legally registered and it is not the case of the Customs that the registration is false;
(B) the Customs have failed to show that under what authority of law the import documents are required to be retained by the owner of a vehicle indefinitely;
(C) the appellant has produced sufficient evidence to show that the seized vehicle was legally imported and legally registered;
(D) the Memorandum of Appeal was very much sent to the respondents and they have failed to file cross-objections. The Memorandum of Appeal is supported by an affidavit and no contrary evidence was produced by the department. In these circumstances, it is evident that the department has no case to prove;
(E) the Customs authorities have confirmed that the duties and taxes have been paid against the said vehicle and this fact is evident from the copy of the note sheet presented by the importer with his appeal which suggests that an amount of Rs.5,05,057 was paid vide-Cash. No. 4010 dated 8-6-1991.
7. From the above, it is evident that vehicle was legally registered and the appellant has not committed any customs offence."
9. Similarly, a Division Bench of this Court, while hearing the reference filed by the department against above order has held as under:--
Mr. Iqbal Haider Wahniwal, Advocate for the appellant.
Messrs Asim Munir Bajwa and Dilharam Shaheen, Advocates for respondent.
The contention of learned counsel for the appellant that appellant had presented forged documents for clearance of the vehicle and thus it was liable to be confiscated. However, by order in original dated 27-9-2006 the vehicle was to be redeemed after payment of redemption fine of 30% of the value of vehicle and additional duty and taxes.
It is stated by the learned counsel for the appellant that said duty and taxes were not paid by the respondent and got it registered on the basis of forged documents before the registration authority.
Show-cause notice placed on record reflects that no such ground was raised by the department while issuing the notice. Even otherwise, issue that whether vehicle got released without payment of duty and taxes is a question of fact never raised in show-cause notice, hence the same cannot be opened at this stage, neither it is a question of law arising at of the Tribunal order.
In view of foregoing reasons, reference is dismissed in limine as not maintainable."
10. From perusal of the record and the arguments advanced by the learned counsel for the applicant and respondents, it is seen that the controversy in the instant case revolves around interpretation of the provisions of Section 187 of the Customs Act, 1969 and determination as to whether under the facts and circumstances of this case the applicant could successfully discharge the burden of proof in terms of Section 187. Before dilating upon the controversy as referred to hereinabove, it will be advantageous to refer to a Division Bench judgment of this Court in the case of Kamran Industries v. Collector of Customs reported as PLD 1996 Karachi 68, wherein, while examining the scope of burden of proof in terms of Section 187 of the Customs Act, it has held as follows:
"23. The next objection raised by the learned counsel for the respondents is that under Section 187 of the Customs Act, the burden of proof was on the petitioner rather than upon the Customs Authorities to categorically disprove the allegations of misdeclaration and under declaration levelled by the Customs Authorities. In this respect Mr. S. Tariq Ali has contended that the rulings relied upon by the petitioner counsel become inapplicable as the law has itself clearly cast the burden upon the petitioner. In order to appreciate this objection it is pertinent to scrutinize the provisions of Section 187 which reads as follows:--
`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.'
It appears to us that Section 187 covers two situations which we state as follows:--
(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;
(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.
Situation (b) is not in issue in the present case, however, we feel that it provides for an eventuality where a person is found to be in possession of certain goods which fall under a prohibited category or which in an unlawful manner find place in the possession or custody of the accused. In such case the burden is upon the accused to show that he falls under some exemption or exception to hold such goods. This type of eventuality as envisaged and stated in situation (b) above is essentially a statement of the general principle of the law of evidence contained in Article 121 of the Qanun-e-Shahadat that whosoever claims to all under a preferential or exempt or excepted category must show that he fulfills that conditions to fall within that category. This obviously should not be confused with the factum of possession for which no presumption or burden of proof has been spelt out, in view whereof the possession itself has to be proved independently by the prosecution beyond all reasonable doubt."
It has been further held as under:--
"We feel that it is due to operation of the principles of incidence of burdens of proof vis-a-vis "legal" and "evidential" burdens as discussed above that the process of shifting of burdens become possible. We have already cited the opinion of Adrian Keane and we hold that in order to determine as to which party bears the legal or evidential burden would depend on the terms of the statute, the case-law on the subject as also common sense and equity. In this case we are of the view that in the situation in issue i.e. (a) as discussed in Para 23 above, Section 187 casts upon the petitioner-accused only the obligation to make out a prima facie case as it is only the evidential burden which is borne upon it. Once the petitioners were to satisfy this evidential burden, the legal burden to bring home the ultimate cases lifted upon the customs authorities."
"24. It is situation (a) as stated above in Para 23 which is directly in issue in this case i.e. whether the burden of proof solely lies upon the petitioner to disprove allegations of misdeclaration and misdescription levelled by the Customs Authorities and whether the Customs Authorities are under no obligation to lead evidence and discharge any onus of proof. This part of Section 187 of the Customs Act perhaps appears to be contrary to the general principle of the law of evidence contained in Article 117 of the Qanun-e-Shahadat that whosoever alleges existence of a particular fact must prove the same. There is little doubt that a special law or a particular statute can provide for a distinct regime of rules of evidence than contained in general law. In fact the law goes on as far as providing that the laws of evidence can be altered even by mutual consent and contract. See S.M. Anwar Sethi v. South British Insurance Company Ltd., (PLD 1975 Karachi 458). However, on a closer scrutiny of the provisions of Section 187 and the case-law settled by our Courts on the subject it appears that in such a situation it is only the evidential and tactical burden of proof which is cast upon the accused while the legal burden to bring home the allegations remains with the prosecution. Before we dilate upon the concept of the two types of burdens of proof and explain the terms "tactical", "evidential" and "legal" burdens of proof we shall first discuss the case decided by the High Court of Sindh in Barkat Ali v. The State PLD 1973
659. In this case the controversy revolved round Section 177-A of the erstwhile Sea Customs Act, 1878 which catered for a similar situation as has arisen in the present case i.e. the same provided the burden of proof upon the accused to disprove the case of the prosecution that his intentions were not to defraud the exchequer or evade any prohibition or restriction under the Act. Writing for Court Tufail Ali Abdul Rehman, CJ was of the opinion that the said presumption of burden of proof could not be drawn until the explanation of the accused was first taken into consideration. According to the learned Judge the "normal principle" was applicable i.e. that the accused was entitled to a benefit of doubt where he offered a reasonable explanation which was either acceptable or raised a doubt. In such cases the burden then shifted upon the prosecution to establish the case." Karachi
11. From perusal of the record and as per contents of the show-cause notice issued by the respondents to the applicant, it appears that the allegation against the applicant was that subject vehicle i.e. Toyota Land Cruiser Jeep bearing Registration No. BC-475 has been registered with Motor Registration Authority,
on the basis of irrelevant import documents. The verification sought from Motor Registration Authority, Karachi , by the respondents in response to which the Motor Registration Authority on 26-11-2005 has supplied the copy of computer printout showing that one Mr. Muhammad Aslam Shaikh son of Shaikh Muhammad Younus as registered owner with remarks that the original file has been returned to its owner. Thereafter, the original Registration Book No. NC4745 of the subject vehicle along with following import documents were produced before the customs authorities:-- Karachi
(a) Photocopy of Bill of Entry IGM No. 965/91 dated 3-6-1991 Index No. 69 Cash No. 4010 dated 8-6-1991 along with bill of lading No. NYKS-173024339 dated 14-5-1991.
(b) Photocopy of Import Authorization dated 4-6-1991.
(c) Photocopies of miscellaneous documents regarding clearance of Toyota Land Cruiser Jeep from Port.
(d) Authority letter dated 21-12-2004, issued by Muhammad Aslam Shaikh in favour of Mr. Muhammad Gul son of Haji Janat Gul.
The above referred documents were discarded by the customs authorities in view of the letter dated 7-12-2005 of the Principal Appraiser, whereby it was intimated that the subject vehicle has not been cleared from Custom House and the Bill of Entry is fake/fabricated.
12. However, from perusal of the order-in-original passed by the Adjudicating Officer, it is seen that no finding has been recorded by the Adjudicating Officer with regard to genuineness or otherwise of the documents produced by the applicant in support of his claim regarding lawful import of the subject vehicle and payment of duty and taxes in the sum of Rs.505057. No exercise appears to have been undertaken by the adjudication authority to ascertain as to whether the import documents produced by the applicant in support of his claim of lawful import of the subject vehicle were either irrelevant, fake or fabricated as alleged in the show-cause notice nor there seems to be any effort undertaken by the customs authorities to verify as to whether the registration of the subject vehicle by the registration authority was in accordance with law or not particularly when the registration authority had duly verified the genuineness of the registration and issuance of registration book in respect of subject vehicle to its owner.
13. It will not be out of place to refer to the earlier round of proceedings in the instant matter, wherein after having taken complete stock of hereinabove facts the Appellate Tribunal recorded its finding on facts and law by holding that the applicant has successfully discharged the burden of proof in terms of Section 187 of the Customs Act, 1969 by producing the relevant import documents, whereas the respondent could not succeed in establishing the allegation of smuggling against the applicant. Such finding of fact was duly approved by a Division Bench of this Court in its order dated 11-4-2008 passed in the earlier round of proceedings. However, on remand of the case, the Appellate Tribunal on the same material has taken contrary view, without recording its finding as to how the documents produced by the applicant were fake and fabricated. It has not been taken into consideration as to how, after about 14 years of the import of subject vehicle in the year 1991, the proceedings of confiscation of the subject vehicle from the third owner, particularly in view of lawful registration by the Motor Registration Authority, Karachi, and production of several documents, including Bill of Entry IGM No. 965/91 dated 3-6-1991 Index No. 69 Cash No. 4010 dated 8-6-1991 along with bill of lading No. NYKS-173024339 dated 14.5.1991, Import Authorization dated 4-6-1991, miscellaneous documents regarding clearance of Toyota Land Cruiser Jeep from Port and Authority letter dated 21-12-2004, issued by Muhammad Aslam Shaikh in favour of Mr. Muhammad Gul son of Haji Janat Gul, was justified under the facts and circumstances of the case. It appears that the finding of the Appellate Tribunal is based upon surmises and conjectures, whereas the documents produced by the applicant have been discarded by placing reliance on extraneous material document. We are of the view that the burden of proof which was shifted in terms of Section 187 of the Customs Act, 1969 upon furnishing hereinabove mentioned documents by the applicant upon the customs authorities could not be satisfactorily discharged in the instant case.
14. In view of hereinabove facts and the case-law as referred to hereinabove, we are of the view that the respondents could not make out a case against the applicant of alleged smuggling, whereas the applicant, after having produced the relevant documents of import and the registration book, successfully discharged the onus in terms of Section 187 of the Customs Act, 1969, hence no adverse inference under the circumstances could be drawn in this regard. Accordingly, we hold that the impugned order passed by the Appellate Tribunal is based on mis-reading and non-reading of evidence available on record, whereas the effect of provisions of Section 187 of the Customs Act, 1969 was not properly appreciated. Consequently, instant Special Customs Reference Application is hereby allowed and the proposed Question No. 1 is answered in affirmative, Questions Nos. 2 and 3 are answered in negative, whereas Question No. 4 is answered in affirmative, all in favour of the applicant and against the respondents.
15. Copy of this judgment shall be sent under the seal of the Court to the Appellate Tribunal, who shall pass the order in conformity with the judgment of this Court.
(R.A.) Order accordingly