Shaikh RASHID AHMED and another vs ASSISTANT COLLECTOR, SPECIAL

ORDER

' Since all the parties were present and appeared to be prepared to proceed with the matter, we decided to admit the petition and take up its final hearing.

2. The petitioners have called in question the demand notice, dated 1-10-2005 in respect of an allegedly fraudulent rebate claim. The relevant facts appear to be that a duty draw back claim was preferred by a proprietary firm called Hena Garments owned by the one Muhammad Sohail and his brother Muhammad Yousuf relating to export of some textiles in 1992 for an amount of Rs,774,869. Apparently it was subsequently discovered that no foreign exchange remittances were received against the said export and even earlier the exporter had fraudulently managed to draw duty draw back. The value of the goods also appeared to be over assessed. Consequently show- cause notices for recovery under section 32 of the Customs Act were issued by the Respondent No,3 not merely to the exporters but also a number of other persons including the petitioner No,1. It is pertinent to mention here that the petitioner was apparently implicated because of the fact of having some transactions with the exporters and having received certain amounts through crossed cheques drawn by the exporters.

3. After hearing the parties, the Respondent No,3 passed an orderin-original, dated 11-11-1999 directing that a total amount of Rs,29,328,072 paid as duty draw back to the exporters against various consignments be recovered. Nevertheless, strangely enough the two exporters were only directed to pay Rs,6,565,536 each. The petitioner No,1, however was held liable to pay the major amount i,e, Rs,16,197,000. Apart from the above penalties of Rs,2 millions each purportedly under clause (14) of section 156(1) were imposed upon the exporters whereas the petitioner No,1 was subjected to a penalty of Rs,4 millions.

4. The only material on the basis of which the petitioner was foisted with liability appeared to be the acknowledged fact of having received the amount of Rs,6.2 millions at different times through crossed cheques, which according to the petitioner related to entirely unconnected transactions.

Apparently there was nothing on record to indicate payments having been made in relation to the exported consignments. The other ground is stated to be the disclosure made by a postman to the effect that the petitioner had asked him to deliver the mail addressed to the exporter at his office.

Nevertheless, Mr. Zubedi emphatically contended that the aforesaid postman was never examined before the Respondent No,3 and Raja Muhammad Iqbal learned counsel appearing for the said respondents was unable to dispute this assertion.

5. Moreover we are constrained to observe that the officer passing the order-in-original, dated 11- 11-1999 hardly had any clue of the scope of section 32 of the Customs Act. The relevant provisions whereof read as follows:-- "32. Untrue statement, error etc.---(1) If any person, in connection with any matter of customs,

(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or

(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act answer, [knowing or having reason to believe that such document or statement is false] in any material particular, he shall be guilty of an offence under this section.

(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within

(five) years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.

(3) ..........................................................................

(3A)............................................................................

(4) The appropriate officer, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him, which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined.

(5) ."

6. Evidently only a person making a false statement or a false declaration before an officer of Customs can be held guilty of offences under the aforesaid section and can be subjected to a penalty under item 14 of section 156(1) of the Customs Act. It was not even alleged that any statement or declaration was filed by the petitioner No,1 before the Customs Authorities. It has not even been alleged as is evident from a careful consideration of the order-in-original that the said petitioner played any role in the falsification of documents upon which duty draw back was claimed. Moreover section 32(2) enables the refund of the amount erroneously paid. Obviously when Customs Authorities were misled into making payments to the exporters the amount B could only be recovered from them and from no other person. The mere fact that the exporters made payments of large amounts to the petitioners (which might be payable on account of completely unconnected or bona fide transaction) could by no means be sufficient to infer his involvement in the offence. In any case it is well settled that the burden to prove liability for an offence under section 32(1) is squarely upon the Department and no penalty could be imposed on mere inferences."

7. The petitioners preferred an appeal against the aforesaid orderin-original and has alleged that no date of hearing of the appeal was ever notified to him nor was any order disposing of his appeal communicated to him. Nevertheless, the demand notice in question stated that his appeal had been dismissed vide order, dated 30-4-2003. This allegation was reiterated in the parawise comments by order, dated 27-10-2005, we had directed that the record and proceedings of the petitioner's appeal preferred before the Respondent No,2 be made available but the order was not complied with till date. Raja Muhammad Iqbal learned counsel for respondents Nos. 1 to 4 however, placed before us a photocopy of an order, dated 30-4-2003 purported to have been passed in Appeal No,129 of 2002 on behalf of the exporters whereby the appeal was dismissed. He also furnished a photocopy of an order of this court in C.P. No,1267 of 2003 whereby a petition questioning the appellate order preferred by the exporters was also dismissed. He emphatically urged that the petitioner's plea that he was never apprised of the date of hearing of the appeal or the order passed was false.

8. Mr. Shoukat H. Zubedi learned counsel for petitioners however, pointed out that the tenor of the appellate order clearly showed that only an appeal preferred by the exporters had been heard and decided and the defences taken up by them were rejected. There was no finding whatsoever recorded in favour of or against the petitioners. It was also evident that only the counsel representing them and not the petitioner was heard. We repeatedly requested Mr. Raja Iqbal to verify from the record whether notice of hearing of the appeal preferred by the petitioner No,1 was ever served upon him but he was unable to refer to any such notice. It is therefore, evident that the appeal preferred by the petitioner No,1 was never heard nor were the questions raised by him ever taken into consideration. On the contrary efforts were made to mislead this Court by filing comments which were untrue in material particulars.

9. As regards the case against the petitioner No,2, the position of the department is still worse.

There is nothing whatsoever even to infer that any allegations of any nature was ever made against her by the authorities. It appears that coercive measures for recovery are being applied against her merely because of the fact that the house where the petitioner No,1 is living belongs to her. We are afraid such highhandedness on the part of officers vested with extensive powers for recovery of public revenues has to be strongly discouraged. In the circumstances, we would allow the petition and direct the Respondents to pay costs in the sum of Rs,20,000 (Rupees Twenty Thousands only) to be shared by the Respondents Nos.1 to 4. Mr. Zubedi however, has volunteered that such costs be deposited in the Sindh High Court Bar Library.