Collector Customs Vs Diyar Muhammad

JUDGMENT SHEET

PESHAWAR HIGH COURT, PESHAWAR

(JUDICIAL DEPARTMENT)

Custom Reference No. 180-P/2020 with CM No. 156-P/2020 Collector Customs, Model Customs Collectorate, Jamrud Road, Peshawar vs. Diyar Muhammad Khan.

J U D G M E N T.

Date of hearing: 17.09.2020

Petitioner (s): By Mr. Ishtiaq Ahmad (Junior), Advocate.

Respondent (s): By Mr. Irshad Ahmad Durrani, Advocate.

SYED ARSHAD ALI, J.- This Custom Reference filed by the Collector Customs under Section 196 of the Customs Act, 1969 (“Act”) against the judgment/order passed by the learned Customs Appellate Tribunal, Peshawar Bench, accepting the appeal of the respondent Diyar Muhammad Khan thereby allowing him release of ten (10) tolas gold against leviable duties and taxes.

2.Good numbers of questions of law have been framed for adjudication of this Court, which shall be dealt with in latter part of this judgment.

3.The brief facts of the case are that the respondent Diyar Muhammad Khan through his Flight No. PA-675 on 22.03.2018 had arrived at Bacha Khan Airport, Peshawar from Riyadh (Kingdom of Saudi Arabia). While the bag of respondent Diyar Muhammad Khan passing through the

scanning machine, it led to the recovery of Foreign Origin Fine Gold three (03) Bullions Suisse (10 tolas each) (“Goods”). It is the case of the present petitioner that the respondent-passenger, on demand, had failed to produce any legal document on its import, therefore, the goods were taken into possession vide recovery memo dated 22.03.2018 and were seized under Section 168 of the Act for violation of Section 2(s), 16, 139 of the Act and SRO 760(1) 2013 dated 02.09.2013 punishable under Sections 156(1) (8) (89) of the Act read with Sections 3(1) & 3(3) of the Imports and Exports (Control) Act, 1950.

4.For the purpose of adjudication, the matter was entrusted to the Deputy Collector Custom (Adjudication), Peshawar, who had issued a show cause notice to the respondent Diyar Muhammad Khan on 06.07.2018, which was replied by him. The learned Adjudicating Officer vide order- in-original dated 31.10.2018 ordered for the release of goods on payment of taxes and duties besides payment of redemption fine equal to 20% of the Customs value of the goods.

5.The aforesaid order of Adjudicating Officer was challenged by the present petitioner through an Appeal No. 39

of 2019 before the Collectorate of Customs (Appeals), Peshawar, who accepted the same and ordered for the outright confiscation of the goods vide order-in-appeal dated

6.Being aggrieved and dissatisfied from the order of the learned Appellate Forum, respondent Diyar Muhammad Khan had approached the learned Customs Appellate Tribunal, Peshawar Bench through second appeal, who, while accepting appeal, allowed release of goods on payment of leviable duties and taxes.

7.Learned counsel appearing on behalf of the petitioner/department has argued that bringing into Pakistan the goods in violation of Section 139 of the Act is an offence punishable under Section 156 etc of the Act, besides the said importation is liable to outright confiscation and even cannot be released on payment of redemption fine in view of the bar contained in SRO 566 (1) 2005 dated 06.06.2005 and SRO 499 (1) 2009 dated 13.06.2009.

8.Against that, the learned counsel representing respondent has argued that there is no legal restriction on the import of goods on payment of leviable duties, the only

restriction imposed by the State Bank is that the importer should arrange the foreign exchange for the said import from his own kitty and since the present respondent was working as labourer in the Kingdom of Saudi Arabia, therefore, the said foreign exchange was arranged by him from his own sources.

He has further argued that the respondent has not concealed anything from the custom department and thus, the custom department was under legal obligation to have provided the present respondent an option to declare the same and thus, the outright confiscation of the goods was not justified.

9.Arguments heard and record perused.

10.Before embarking upon the legal discourse, we deem it appropriate to refer to the applicable law, regulations and instructions of the competent authority relating to the import of gold etc.

Customs Act, 1969.

“16. Power to prohibit or restrict importation and exportation of goods. – The Federal Government may, from time to time, by Notification in the official Gazettee, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land”.

17.Detention, seizure and confiscation of goods imported in violation of section 15 or section 16.— Where any goods are imported into, or attempted to be exported out of, Pakistan in violation of the provisions of section 15 or of a notification under section 16, such goods shall, without prejudice to any other penalty to which the offender may be liable under this Act or the rules made thereunder o any other law, be liable to detention, for seizure

or confiscation subject to approval of an officer not below the rank of an Assistant Collector of Customs, and seizure for confiscation through adjudication, if required.

139.Declaration by passenger or crew of baggage.—The owner of any baggage whether a passenger or a member of the crew shall, for the purpose of clearing it, make a verbal or written declaration of its contentions in such manner as may be prescribed by rules to the appropriate officer and shall answer such questions as the said officer may put to him with respect to his baggage and any article contained therein or carried with him and shall produce such baggage and any such article for examination.

Provided that where the Customs Computerized System is operational, all declarations and communications shall be electronic”.

The Foreign Exchange Regulation Act, 1947 “S.8. Restriction on import and export of certain currency and bullion. (1) The Central Government may, by notification in the official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the State Bank and on payment of the fee, if any, prescribed bring or send into Pakistan any gold or silver or any currency notes or ban notes or coin whether Pakistan or foreign”.

Relevant para of Chapter XVIII of the Import and Export of Currency Notes and Coins, Foreign Exchange, Jewellery, Gold and Silver issued by the Federal Government under Section 8 of the Foreign Exchange Regulation Act, 1947.

16.Import of Gold and Silver.

(i)The Federal Government by their Notification No. 1(2) ECS/48 dated the 1st July, 1948 issued pursuant to sub- section (1) of Section 8 of the Act have prohibited, except with the general or special permission of the State Bank, the import into Pakistan from any place outside Pakistan of:

(a)any gold coin, gold bullion, gold sheets or gold ingot whether refined or not, and any silver bullion, any silver sheets or plates which have undergone no process of manufacture subsequent to rolling or any uncurrent silver coin.

Import of gold and silver into Pakistan is, therefore, subject to State Bank’s authorisation.

(ii)Import of pure gold/silver and rough/uncut precious and semiprecious stones will be allowed against export of gold/silver jewellery and cut and polished precious/semi- precious stones in accordance with the procedure notified

by the Government of Pakistan and the instructions issued by the State Bank from time to time.

(iii)The State Bank vide its Notification No. F.E.1/94-SB dated the 20th March, 1994 has granted general permission for import of gold into Pakistan from any place outside Pakistan as accompanied baggage provided such imports are made in accordance with the existing import policy”.

Condition imposed for import of gold and silver under the Import Policy Order, 2018 appendix (b) part-II "importable subject to the condition that the importer shall arrange his own foreign exchange for the purpose".

SRO 566(1) 2005 dated 06.06.2005

“Notification No. S.R.O. 566(1)/2005, dated 6th June, 2005.- In exercise of the powers conferred by sub-clause (ii) of clause (s) of section 2 and sub- section (2) of section 156 of the Customs Act, 1969 (IV of 1969), and in suppression of its Notification No. S.R.O. 491(1)/85, dated the 23rd May, 1985, the Federal Government is pleased to specify the following goods for the purpose of the aforesaid sub-clause (ii) of clause (s) of section 2 and sub- section (2) of section 156, namely:-

(16)Gold bullion, silver bullion and manufactures of gold and silver”.

SRO 499(1)2009 dated 13.06.2009

S.R.O.499(I)/2009.- In exercise of the powers conferred by section 181 of the Customs Act, 1969 (IV of 1969), and in supersession of its Notification No. S.R.O. 487(I)/2007 dated 9th June, 2007, the Federal Board of Revenue is pleased to direct that no option shall be given to pay fine in lieu of confiscation in respect of the following goods or classes of goods, namely:-

(a)smuggled goods falling under clause (s) of section 2 of the Customs Act, 1969 (IV of

11.The following facts/legal position is evident from the perusal of the aforesaid legal instruments.

i. The import of goods is permissible into Pakistan through authorized routes on payment of duties and taxes.

ii. The said goods has to be declared in terms of Section 139 of the Customs Act, 1969. The importer of gold has to arrange foreign exchange from his own.

iii. The import of goods through unauthorized routes or in violation of Custom Act or Foreign Exchange Regulation Act is liable to confiscation and cannot be released on payment of redemption fine under section 181 of the Customs Act, 1969 in view of the bar contained in SRO 566 (1) 2005 dated 6.6.2005 and SRO 499 (1) 2009 dated 13.06.2009.

12.In the context of the present case, the respondent Diyar Muhammad Khan is a citizen of Pakistan, who was working for gain in the Kingdom of Saudi Arabia. He had travelled to Pakistan on 22.3.2018 and his luggage while going through the process of scanning, it led to the recovery of 30 tolas gold. Thus, the essential question for determination of this Court is whether the aforesaid act of the respondent is in violation of Section 139 of the Customs Act, 1969 read with section 8 of Foreign Exchange Regulation Act, 1947? What is the effect of seizure of the goods without giving an option to the respondent to declare the aforesaid goods for payment of duties and taxes?

13.Admittedly, the respondent Diyar Muhammad Khan as evident from the recovery memo and seizure report has not concealed the import of goods from the petitioner- department. Thus, it is not evident from the record that the

respondent had any intention to smuggle the goods without payment of taxes and duties. From the facts and circumstances of the case, we cannot assume that the case of the respondent falls within the ambit of attempt to smuggling. The appropriate officer designated at the custom airport is duty bound to facilitate the passengers and not to trap them on technicality. Once the passenger himself has surrendered his luggage to the officer and has not concealed the same and it was the duty of the custom officer concerned to have facilitated the passenger by giving an option to declare the goods for payment of duties and taxes. In the case of Masood vs. The State (1987 MLD 1602), the Hon'ble Karachi High Court as then it was in a similar circumstances has held that:

“The learned trial Judge while convicting the appellant failed to note that mere presence of gold in the baggage of appellant was not sufficient to hold that he was guilty of offence of smuggling or an attempt to smuggle gold as in the event of a true declaration of such contraband gold under section 139 of the Act the appropriate officer had the discretion to detain such article for the purposes of being returned to him on his leaving Pakistan. The plea of the appellant that he had informed the Customs Officer Shakir Husain or in the alternative he was not afforded any opportunity to declare the same under section 139 of the Act, find support from the fact that in the F.I.R. which was lodged by the Customs Officer Shakir Husain immediately after seizure of gold, makes no mention about the declaration of appellant under section 139 of the Act. The fact that the Customs Officer Shakir Husain admitted in his cross- examination that the gold carried by appellant was not concealed in the false bottom of the hand bag as alleged in the F.I.R. but was obviously lying with the clothes of the appellant goes to show that there

was no attempt on the part of the appellant to keep the gold in a manner which would have avoided its detection n the ordinary course of search. In these circumstances I am of the view that the prosecution failed to establish smuggling or attempt to smuggle gold by the appellant in Pakistan. The appeal is accordingly allowed and the conviction and sentence awarded by the Special Judge (Customs and Taxation) Karachi is set aside. The appellant is on bail his bail bonds are accordingly cancelled”.

14.Similarly, the Apex Court in the case of Central Board of Revenue and another vs. Khan Muhammad (PLD 1986 Supreme Court 192) has elaborately dealt with the matter where the respondent in that case was a citizen of Afghanistan, who arrived at Torkham land Custom Station from Afghanistan and was in transit to U.K. through Pakistan, was found in his possession huge foreign currency was intercepted at the customs station. It was held by the Apex Court in para-9 of the judgment that:- “Applying the aforesaid principles to the present case we are of the firm view that the acts done by the respondent before he was intercepted at Peshawar Airport did not constitute attempt to smuggle the alleged foreign currency out of Pakistan but at best the stage reached was that of mere preparation to commit that offence. As already discussed even if there is undoubted evidence of intention to commit the offence on the part of the offender and of preparation to carry out that intention the law does not make the person entertaining such intention or doing such acts of preparation culpable, so far as the offence of smuggling is concerned. Because there is always in such cases a possibility of change of mind or locus poenitentia to give up the prosecution of the criminal intent beyond the stage of preparation. We, therefore, agree with the learned Judges of the High Court, that the mere act of boarding internal flight from Peshawar to Karachi was not an act of such an approximate nature as would amount to an attempt to smuggle, although it might constitute preparation to commit that offence. The act of

boarding a flight at Peshawar which terminates at Karachi not an act of forming part of series of acts which could constitute actual commission of the crime of smuggling if it were not interrupted. If any further acts had been done by the respondent to board a plane which would have taken him out of the country alongwith the contraband goods, there might have been a case of an attempt. But before he could embark upon any such act, he was intercepted at Peshawar, so that the act attempted by him does not satisfy the test that the doing of the same cannot reasonably be regarded as having any other purpose than the commission of the specific crime”.

15.Indeed, under Article 24 of the Constitution of Islamic Republic of Pakistan, 1973, no person can be deprived of his property save in accordance with law. In the circumstances, when the respondent Diyar Muhammad Khan has not concealed the goods and the relevant officer of the customs department while noticing the goods in the bag of the respondent as the said goods were not imported in violation of Section 8 of the Foreign Exchange Regulation Act, 1947 or the Import Policy/State Bank Regulation, then by not offering option to the respondent for declaration of the goods and seizure in terms of Section 168 of the Customs Act, 1969 was not unwarranted under the law, therefore, the impugned order of the Tribunal allowing the respondent release of goods seems to be in accordance with law.

16.In view of the above, the Custom Reference along with C.M. No. 156-P/2020 is dismissed and the

questions of law are answered in Negative. Copy of this judgment be sent to the learned Tribunal for information.

Announced

JUDGE

JUDGE

Nawab Shah CS (DB) Justice Ikramullah Khan & Justice Syed Arshad Ali