Abdul Razzaq (Applicant) VS The Directorate General DGI&I-FBR & others (Respondent)

IN THE HIGH COURT OF SINDH AT KARACHI

Before: Mr. Justice Muhammad Junaid Ghaffar Mr. Justice Muhammad Karim Iftan Agha

Spl. Cust.Ref.A. No.340 of 2013

AbdulRazzaq Versus The Director General of Intelligence & others r Date of hearing: 14.01.2016

Date of Judgment 26.0r.20t6

Applicant: Through Mr. Sardar FaisalZafar, A dvocate

RespondentNo.l: Through lvft. Khalid Mehmood Dhoom' advocate.

Respondents No.3: Through Ms.Dil Khurram Shaheen' A dvocate

JUDGN{ENT

Muhammad Karim Khan O. J. This Customs Reference Application No.340 of 2013 was filed by the Applicant under s.196 of the customs Act 1969 against the Order dated 13-8-2013 of the Customs Appellate Tribunal Bench II Karachi.

2.The brieffacs ofthe case as per show cause notice daled 14-5'210 issued by Deputy Collector of Customs Model Collectorate of Customs (Preventive) to the Applicant are that information was received by'the Directorate Ceneral of Intelligence & Investigation-FB& Regional Office, Karachi, to the effect that huge quantity / non duty paid foreign origin ladies Art Silk Cloth (Made in India)

had been dumped at Godown-I Plot No.176, Al-Habib Textile Mills Garden west"

Karachi for its illegal sale and disposal in open market at Karachi and that the secreted ladies art silk cloth may be removed from the said godown at any time.

3.In pursuance of the said information, on 20'03'20100 a team of officials was constituted under the supervision of Additional Director (ASO), Directorate of dumping General Intelligence & Investigation, FB& Karachi to foil the attempt / removal of smuggled foreign origin ladies art silk cloth from the aforesaid godown.

private 4, The constituted team on 20.03.2010 raided the aliove mentioned godown. The occupant of the premises introduced himself as AMul Razaq S/o that Abdul Ghafar, working as Munshi with Abdul Qadir. He further disclosed on month the aforesaid premises (Godown) has been acquired by Abdul Qadir' The Additional rent who was the owner of ladies art silk cloth (Made in India).

v.

Director (ASO) in order to conduct search of the gOdown, in presence of two witnesses served statement under section 163 of the Customs Act, 1969, upon Abdul Razaq S/oAbdul Ghafar. Detailed search of the aforesaid godown resulted in the recovery of54 bales and 05 lose bags, ladies art silk cloth oflndian origin, weighing 3220 kgs. Having marks of "In Transit to Afghanistan Via Karachi".

5.That during search proceedings Abdul Qadir, owner / claimant of the recovered ladies art silk cloth also joined at godown. Bo& of the aforesaid persons were asked to produce legal import documents in support of lawful possession and import of the ladies Art silk cloth of Indian origin. However they failed to produce any legal import documents showing clearance of recovered ladies Art: Silk against filing of goods declaration and payment of duty and taxes leviable thereon. AMul Qadir, during recording of statement disclosed that he has purchased the recovered ladies Art. Silk Cloth from open market (Quetta) without the cover of legal import documents.

6.Since no import documents in respect of ladies art silk cloth of India origin, packed in 54 bales and 05 lose bags weighing 3220 kgs. were produced, therefore, the same after preparation of inventory and. mushimama duly signed by witnesses were seized in terms of section 168 of the customs Act, 1969, for violation ofthe provision ofsection 2(s) and 16 punishable under clauses (8)' (9),

(89)(90) of subsection 0) e. Q) of section I 56 ibid. Notice under section 17 I of the customs Act, 1969. was served upon Abdul Razaq S/o Abdul Ghafar.

7.At the hearing before the Deputy Collector the main defense of the Applicant was the simple assertion that the goods had been purchased in the open produced market and had not been smuggled with no documentary evidence being in support ofthis contention.

S.TheDeputyCollectorfoundagainsttheApplicantbyorderinoriginal dated 9-10-10 in the following terms at Para 5 of the Order:

..5.I have gone through the written and verbal, submissions of the learned advocate oi the Claimant owner and the case recbrd. The owner has failed to submit any proofof legal possession ofthe goods or proofto the effect that -( the duty *i tu* has blen paid on the seized foreign origin good' The facts nanatei herein above lead io inference that the impugrred goods are non-duty paid and without any legal import documents' I, therefore' order outright in54 bales confiscation ofseizi taales artiitk cloth oflndia Origin, packed *J oj lose bags weighing 3220kgs. for violation of section 2(s) & 16 of the 156 (l) Customs Act,1969 p-unistrable under clauses (89) & (90) of Section ibid read with 499 (i)/2009 dated 13.06'2009'"

g.TheApplicantbeingdissatisfiedwiththeorderinoriginalappealedthe same under S.193 of the customs Act 1969 to the collector of customs Appeals'

ByorderinAppealdated23-2-20lltheCollectorupheldtheorderinoriginal.

1b Again being dissatisfied with the Order in Appeal the Applicant moved further appeal under 5.194 (A) of the Customs Act 1969 before the Customs Appellate Tribunal (Karachi) Bench II assailing the Order in Appeal. By Order dated l3-8- 2013 the Tribunal rejected the Applicants appeal andmade pertinent observations at Para 8 and 9 ofits Order which are reproduced below for ease ofreference.

"Para 8. The subject appeal can only be disposed offon the short point that the goods detained I seized by the officials of respondent > no.l are made in "India'o (India Origin) which are not importable from India in terms of Appendix-G to paragraph -5 (B)(iii) to the Import Policy Order 2010-2011 and on the basis of cartons in which the subject goods were packed containing the marking "in transit to Afghanistan via Karachi" since the Advocate of the appellant has taken several factual and legal grounds in stereotypical manner inspite ofthe fact that those are irrelevant in the instant case. I will like to conhovert the same for laying to rest such type of grounds often adopted by the Advocate of the appellant in similar nature of cases.

"Para 9. Notwithstanding to above, it is of vital importance to lay emphasis on the fact that the appellant right from the stage of detention/seized and adjudication proceedings failed to place on record the purchase receipt in support bfhis contention that he has purchased the instant goods from Quettq instead took the plea thar he has neither given or obtained any cash memo or bill from the seller ofthe goods, resultant, the charge leveled in the show cause notice stood established against him by virtue of the fact that he miserably failed to discharge burden of proof laid upon under Section I 87 of the Customs Act, 1969 and Article 1 I 7 and l2l of Qanoon-e-shahdat (10 of 1984) and by the Superior Judicial Fora in umpteenth reported judgment."

10.It is significant to observe at this stage that the Applicants plea had been rejected by 3 separate adjucative bodies through speaking orders after giving the applicant a full opportunity to present his case. Never the less the Applicant being dissatisfied with the Order of the Tribunal moved a Reference Application under S.196 of the Customs Act before this Court.

I l. In the Reference the Applicant in order to iet aside the Tribunal Order raised the following questions of law:

-( I. whether on the facts & circumstances of the case, the goods which are treated as smuggled are importable or not in accordance with import policy order 2010-201 l?

II. Whether the packing material without 100% examination of goods can be construed as of Indian Origin?

il. whether auction proceeding has been conducted in accordance with auction mles prior to intimation vis a vis issuance of notice?

[v. Whether the goods which are sold in open market without invoices can 'v) be treated as sale/purchase for bonafide pumose?

V Whether ignoring the earlier material directives vide order dated 25.02.2013 given to the respondents for'examination of Impugned Cloth is tantamount to non-reading or mis-reading by the learned Single Member of Appellate Tribunal while passing a final judgment vide dated 09.09.2013?

12.Leamed Counsel for the Applicant during his arguments mainly confined himself to the fact that the goods in question had been purchased in the open market and had not been smuggled into Pakistan as alleged by the customs > Authorities and wrongly found by the Tribunal. He pointed out that not a single piece of evidence had been produced by the Customs authorities to prove the act of smuggling and as such since the burden of proof lay on them they had totally failed in discharging it and as such the Tribunal Order should be set aside' 13 He placed reliance on the following authorities in support of his submissions:

1.(1) Pakistan and (2) The Assistant Colleetor, Central Excise and iand Customs, Kohal v. Qazi Ziauddin, P'L'D' 1962 S'C' 440'

2.Mian Shafiq AIam V. The Collector Customs, 1988 M'L'D' 2085' 3. Sikandar A. Karim v. The State, 1995 S'C'M'R 387'

4.Muhammad Saeed & another v. Collector, Customs, Central Excise, Peshawar,2005 P.T.D. 18l3.(this case only allowed-leave to appealcertainquestionsoflawanddidnotdecidethemsowillnotbe considered)

14.On the other hand leamed counsel for the Respondent No.l (DG of Intelligence and investigation FBR Regional office Karachi) fully supported the

were more Tribunal Order on all counts. He submitted that all the questions raised upon by this factual in nature than legal and as such could not be adjudicated had failed Court as they were not questions of law. Even otherwise the Applicant goods from the through any kind of evidence to prove that he had purchased the the goods local market which burden of proof rested with him and by inference customs and must have been smuggled into Pakistan whilst evading the applicable the arguments of other duties.Leamed counsel for Respondent No.3 adopted Respondent No.l

15.We have carefrrlly perused the record, the relevant law and considered the cited by them at the bar' submissions of the learned Counsel and the authorities

16.At the outset we are of the view that in essence this Reference, as alluded Reference primarily to in Para 8 of the Tribunal,s order, and the questions in the concemwhetherthegoodswerepurchasedintheopenmarketorweresmuggled proof in this respect' into Pakistan and which party bears the burden of rr/

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17.The offense charged is in respect of violation of S.2 (s) and 5.16 of the Customs Act 1969 which for ease of reference are set out below:

s.2 (s) "smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force rz[, or en routue pilferage oftransit goods], or evading payment of customs-duties or taxes leviable thereon,--

r

(i)gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, cunency, narcotics and narcotic and psychotropic substances;

or

(ii)manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazefte, w[rich, in each case, exceed [one hundred and] [fifty thousand rupees] in value;

or

(iii)any goods by any route other than a route declared under section 9 or l0 or from any place other than a customs station

and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly];

S.l6 reads as under:

o'16. Power to prohibit or restrict importation and exportation of goods.-The [Federal Govemment) may, from time to time, by Notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land."

18.It is significant that it has not been denied that the goods detained / seized by the offrcials of respondent no.l are made in "India" (India Origin) which are not importable from India in terms of Appendix-G to paragraph -5 (B)(iii) to the lmport Policy Order 2010-2011.

19.Thus the goods in question should not have even been in Pakistan unless -t they had been smuggled into the Country under S.2(s).As noted earlier the key issue to be determined therefore is whether the Applicant smuggled the goods into Pakistan as claimed by the Customs authorities or whether the Applicant purchased them in the local market from Quetta and therefore was not responsible for smuggling them into Pakistan and which party bore the burden of proof in this respect.

20.According to the Applicant the burden of proof lay on the Customs authorities to prove that he had smuggled the goods into Pakistan which they had

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failed to do because they had simply seized the goods from him in Pakistan which he had purchased in the open market without any evidence that he had actually smuggled in the goods.

21.In this respect he relied on (1) Pakistan and (2) The Assistant collector' Central Excise and Land Customs, Kohat. v. Qazi Ziauddin, P.L.D. 1962 S.C. 440 which at P.440 stated as under:

r "section 177-A requires reasonable beliefon the part ofthe person seizing the goods that an act to defraud the Government of duty has been committed. If a person purch'ases goods in an ordinary market then in the absence of any suspicious circumstances or some definite facts leading to that inference the Customs Offtcer is not entitled to a reasonable belief that the Govemment has been defrauded ofthe duty payable on the goods. The ordinary method of the Import of goods from outside into Pakistan is that they come through the Customs banier and the duty payable is in fact paid. The presumption, therefore, with respect to any goods which may be sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them."

22.This case however is distinguishable from the present case since it concerned goods which were importable into Pakistan.Furthermore customs had acted on a tip off which lead to the discovery of the goods at a Godown in Karachi where the goods were found in cartons marked "ln Transit to Afghanistan Via Karachi" which gave rise to a reasonable belief that the goods had been smuggled and no duty had been paid on them.

23.Reliance was also placed on Mian Shafiq Alam V' The Collector Customs, 1988 M.L.D. 2085 which held as under on P.20E7 ' "Having accepted the validity of the cash memo, it is not understoodhowtheleamedCollectorofCustoms(Appeals)placed the onus on the petitioner to prove that duties had been paid on the saidsecondhandair-conditionerinsteadoftumingtotheacfual sellerofthesaidair-conditioner,whichwasKhanEngineersand Company, Peshawar. In S.A. Haroon's case P L D 1967 S C 458 at 460, the Supreme Court has held that the condition precedent for the exercise of jurisdiction by the collector of customs is not merely to show that the goods have been imported' -but that they have been illegally imported. In respect of items of .general use' such as, air_condiiioners, tape recorders, electric appliances, etc., { which are sold and resold in the open market, both new and old' great inconvenience will be caused to the public if second-hand purchasers and they are loods are seized in the hands ofbona fide to show documentation to prove that duties thereon have ^k"d been paid. It is not enough in these cases to merely show that goods seized which are in second-hand condition is of foreign 6rigin, but that there is reasonable basis to believe that they were iffelgAiy imported by the person from whom they have been

seized."

24.Againthiscaseisdistinguisblefromthefactsandcircumstancesofthe cash memo to present case since in this case t}e accused was able to produce a dv

show who he had purchased the goods from. Hence, prima facie he had been able to show that he had not smuggled in the goods.

25.Further reliance was also placed on Sikandar A. Karim v. The State, 1995 S.C.M.R. 387 where the Hon'ble Supreme Court held as under on P.407:

Y "If the items alleged to be smuggled by the prosecution were available freely in the open market and imports of such goods were not banned in the country, a presumption may arise that these goods were lawfully brought in the country unless contrary is shown."

26.Again this case is distinguishable from the facts and circumstances of the present case because the import ofthe goods in question were banned and hence no presumption would arise .Furthermore, although it was different from the present case in that it was a case for bail significantly it was held at P.389 "Unlike an ordinary criminal case where burden of proof is always on the prosecution to prove its case against the accused person beyond reasonable doubt, section 156(2) of the Customs Act provides that where goods specified in clause (s) ofsection 2 ofthe Act or in a notification issued thereunder, are seized under the Act in the reasonable belief that an act to'defraud the Govemment of any duty payable thereon or to evade any prohibition or reshiction for the time being enforced in respect of such goods has been committed, the burden of proving that no such act has been committed is on the person from whose possession the goods are seized. It is, therefore, quite clear that a person accused of an offence under section 156(1) (8) ofthe Act has to discharge the initial burden of showing that the goods recovered from his possession were neither smuggled nor their possession rvas unlawful."(bold added)

27.As such none of the cases cited by the Applicant are of much relevance to his stance that the burden of proof lies on the Customs authorities. In fact the portion of the Sikander A. Karim case cited above would tend not to support the 1 Applicants contention.

l

28.The Customs Act 1969 is a special law and.it is well settled that if the -t provisions of a special law are in conflict with the general law e.g. Cr.PC then the Customs Act 1969 will prevail.

29.Reliance is placed on Kamran Industries v collector of customs (PTCL 1996) which found as under at CLl5

"sectiou 187. A special law (Customs Act' 1969) or a particular statute can provide for a distinct regime of rules of evidence than contained in general law (Qanoon-e-Shahadat' l9E4)'- w

tt l.

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."

S.187 of the Customs Act 1969 reads as under:

"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 permig 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, perrnit, licence or other document shall lie on him." (bold added)

30.As provided in 5.187 of the Customs Act it ii clear that at least initially the evidentiary burden of proof falls upon the Applicant.

31.The question of the initial evidentiary burden of proof falling on the applicant was decided in the case of Kamran Industries V Collector of Customs (PTCL 1996) which found as under on CL 15:

"Scope of section 187. 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.

In situation (a) the question whether the burden of proof solely lies upon the petitioner to disprove allegations of mis-declaration and mis- description leveled 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 evidenc€ contained in Article I l7 of the Qanun-e-Shahadat that who so ever alleges existence of particular fact must prove the same'

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 .t- remains with the prosecution. (bold added)

Situation (b) provides that where a person is found to be in possession of ceriain goodi which fall under a prohibited category or which in an unlawfui manner find place in the possession or custody of the accused. In such cases 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 envisiged and stated in situation (b) above is essentially a statement ofthe g"n".ul principle of the law of evidence contdined in Article 121 of the Qanun-e-ShanaAat that who so ever claims to fall under a preferential or or excepted category must show that he fulfils that condition to "i"*pt fall within that iategory. This obviously should not be confused with the w

factum of possession for which no presumption or burden of proof has been spelt ou! in view whereof the possession itself has to be proved independently by the prosecution beyond all reasonable doubt.

32.The evidential and tactical burden being initially placed on the accused in a Customs offense is now well settled law as is the principle that the accused only needs to show some evidence to prima facie discharge his evidential burden and thereafter the same will shift on the Customs authorities' ]r

33.In the present case therefore the initial evidentiary burden fell on the Applicant to show that at least prima facie he had purchased the goods in question from the open market in Quetta from a third pafiy and thus he could not be liable for smuggling and/or violating S.l6 of the Customs Act 1969.

34.In this case the Applicant was not able to produce a single document or other piece ofevidence to show that he had purchased the goods in question from a third party in the open market. Only his bare assertion was on record. Thus as he had failed to discharge his initial evidentiary burden proofwe find that he is liable for the offense charged.

35.Furthermore, it may also be noted that the goods in question were found on (a) the basis of an intelligence report (b) were barined for import in Pakistan (c) were found in a godown in Karachi belonging to the Applicant (d) the Applicant admitted that the goods were his and the goods had marked on their cartons o,ln Transit to Afghanistan Via Karachi".In addition as a matter of common sense a person who purchased a high quantity of high value goods from a third party would be expected to have in his possession at least some kind of receipt of payment bearing in mind that the goods were marked made in India. Taken as a whole all ofthe above would tend to suggest that the goods had been smuggled by the applicant into Pakistan and the relevant customs duties had been evaded in violation of law.

36.The upshot ofthe above discussion leads us to the conclusion that firstly the matter is mainly dependent on a finding of fact recorded by the forums below ,.the goods in question are of Indian Origin", and in these proceedings, per l' i.e.

proposed settled law, we cannot upset such findings of fact, whereas the questions answered by on behalf ofthe appticant are not properly drafted which could be this Court. lnthe circumstrances we would reframe the Question of law, which in the following according to us is a material question involved in the instant case, terms:-

..Whether in the facts and circumstances of the case, the Customs Appe[ate Tribunal was justified in holding that the goods in question are^ r.uggf"a goods and thi applicant has failed to discharge the burden of s

ue proof as to lawful authority for being in possession of the same under Section 187 of the Customs Act 1969."

In view ofhereinabove findings as recorded on the subject controversy, we would answer the same n the aflirmative, in favor of the respondent and against the applicant.

37.Accordingly Reference Application is dismissed. The Registrar of this }- Court is directed to send a certified copy of this order to the Customs Appellate Tribunal in terms of Section I 96(5) of the Custom Act, I 969, for information.

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