COLLECTOR OF CUSTOMS (PREVENTIVE), KARACHI Versus PAKISTAN STATE OIL KARACHI

1. JAVED IQBAL, J.--- The above captioned appeals with leave of the Court are directed against order dated 10-10-2008 passed by learned Division Bench of High Court of Sindh, Karachi whereby the Special Customs Reference has been dismissed.

2. Leave granting order is reproduced herein below for ready reference:--

2. "This order shall dispose of Civil Petitions Nos. 30-K to 83-K of 2009 as common questions of law and facts are involved.

(2) Learned counsel for the petitioner right at the outset submits that leave has already been granted in petitions raising similar issue. He has referred to the order of this Court reported at Collector of Customs and another v. Messers Fatima Enterprises Limited and others (2005 SCMR 1493) and Civil Petition No.161-K of 2006 which are still pending.

(3) In view of the above since leave has already been granted in the afore-referred petitions (Civil Petitions Nos.161-K of 2006, 703-K and 704-K of 2003), leave is granted in these petitions as well and office is directed to fix these appeals along with the afore-referred cases."

3. Precisely stated the facts of the case are that "there was a difference between the manifested quantity of oil and actually recovered oil and the respondent has paid Customs duty on the recovered oil only and not on the manifested quantity of oil. Therefore, Show-Cause Notice was issued by the applicant under section 32(1) and (2) for the recovery of the revenue loss due to the action of the respondent. The learned tribunal after examining the facts of the case has come to the conclusion that the show cause notice though issued under section 32(1) and (2) does not fall under this section as no allegation has been made that any forged document has been filed or the respondent has succeeded in paying the lesser duty due to collusion with some Custom Officer. On perusal of the show-cause notice we find ourselves in full agreement with the conclusion reached by the Tribunal."

4. Raja Muhammad Iqbal, learned Advocate Supreme Court entered appearance on behalf of appellant and contended that legal and factual aspects of the controversy have not been appreciated in its true perspective which resulted in serious miscarriage of justice and on this score alone the order impugned is liable to be set aside. In order to substantiate the said contention, it is submitted that the provisions as enumerated in section 32 of the Customs Act, 1969 (hereinafter referred to as the 'Customs Act') have been misinterpreted and misconstrued. It is next argued that a Special Customs Reference should have been dilated upon and decided by the learned Division Bench as no question of fact was involved and therefore, the order impugned is not in consonance with the record which escaped the notice of learned Division Bench of High Court of Sindh causing serious prejudice against the appellant. It is also contended that the content of show-cause notice were neither perused by the learned High Court nor the Tribunal resulting in huge loss to the Government exchequer.

5. Mr. Aziz A. Sheikh, learned Advocate Supreme Court entered appearance on behalf of respondent and supported the order impugned for the reasons enumerated therein with the further submission that the provisions as enumerated in section 32 of the Customs Act could not be made applicable hence issuance of show-cause notice being illegal and badly barred by time has rightly been declared as without any base and legal foundation.

6. We have carefully examined the order impugned and perused the entire record with the eminent assistance of learned counsel on behalf of the parties. The opinion of learned High Court of Sindh was sought on the following points:--

3. "(1) Whether on the facts and circumstances of the case, the learned Tribunal erred in law to hold that Show-Cause Notice for evasion of duty falls under section 32(3) of the Customs Act instead of section 32(2) of the Customs Act 1969 ibid?

(2) Whether on the facts and circumstances of the case the learned Tribunal erred in upholding the validity of the Show-Cause Notice under section 32(3) where in fact it had been issued under section 32(2) of the Customs Act, 1969?

(3) Whether on the facts and circumstances of the case the learned Tribunal erred in law to not consider that same issue has been decided by the Hon'ble Division Bench of the Court reported in 2007 PTD 1608?"

7. The learned Division Bench has rejected the Reference vide order impugned with the following observations:--

4. "The finding of the Tribunal is a finding of fact and is unexceptionable. Even otherwise the alleged proposition of law canvassed by the learned counsel of applicant has already been decided by this Court, which is binding on us. We, therefore refuse to exercise our advisory jurisdiction and answer the proposed questions. All these Customs Reference Applications are therefore, dismissed in limine".

8. The pivotal question which needs determination would be as to whether the import levies should have been recovered on the "delivered quantity" of oil or "manifested quantity" of oil and whether show-cause notice could have been issued under section 32(1) and (2) of the Customs Act or otherwise? We intend to examine the provisions as enumerated in section 32 of the Customs Act which are reproduced herein below for ready reference:--

5. ".....32. False 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 to 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 three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.

(3) Where, by reason of any inadvertence, error or misconstruction, 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 (six months) of the relevant date requiring him to show cause why he should not pay the amount specified in the notice....".

9. Now here at this juncture it would be proper to examine as to whether the provisions as enumerated in section 32 of the Customs Act, reproduced hereinabove, can be made applicable in these cases or otherwise? The language as employed in section 32 of the Customs Act is plain and simple and no scholarly, interpretation would be needed. The provisions as envisaged in section 32 of the Customs Act would be attractive in the following cases:--

(i) On filing deceptive, false and fake declaration, notice, certificate, document or statement;

(ii) Issuance of notice within a period of three years for payment of specified amount in case of short levied of duty, its non-payment, erroneously refunded as a result of some collusion;

(iii) In case of inadvertence, error or misconstruction, non-levied or short levied of any charge/duty, the payment shall be made subject to notice within six months;

10. A careful scrutiny of the entire record would reveal that it is neither the case of forgery nor fraud and thus falls within the ambit of section 32(3) of the Customs Act for which issuance of notice within six months is a mandatory requirement. The details of issuance of notice are as follows:--

6. S. No.

7. Appeal No.

8. Date of Show Cause Notice

9. Date when expired

10. Time barred by days

11. 1.

12. K-615/05

13. 2-9-2002

14. 20-5-1999

15. 39 months

16. 2.

17. K-617/05

18. 28-3-2000

19. 16-1-2000

20. 02 months

21. 3.

22. K-618/05

23. 28-3-2000

24. 18-3-2000

25. 10 months

26. 4.

27. K-619/05

28. 28-3-2000

29. 9-12-1999

30. 3 months

31. 5.

32. K-622/05

33. 28-3-2000

34. 5-7-1998

35. 21 months

36. 6.

37. K-623/05

38. 28-3-2000

39. 7-3-2000

40. 20 months

41. 7.

42. K-624/05

43. 28-3-2000

44. 27-8-1997

45. 29 months

46. 8.

47. K-625/05

48. 28-3-2000

49. 5-3-1998

50. 24 months

51. 9.

52. K-626/05

53. 28-3-2000

54. 23-4-1998

55. 23 months

56. 10.

57. K-627/05

58. 28-3-2000

59. 10-10-1997

60. 29 months

61. 11.

62. K-628/05

63. 28-3-2000

64. 1-1-1998

65. 25 months

66. 12.

67. K-629/05

68. 28-3-2000

69. 14-3-2000

70. 14 months

71. 13.

72. K-630/05

73. 28-3-2000

74. 22-5-1998

75. 22 months

76. 14.

77. K-631/05

78. 13-3-2001

79. 27-12-1998

80. 26 months

81. 15.

82. K-632/05

83. 13-3-2001

84. 18-2-2000

85. 13 moths

86. 16.

87. K-633/05

88. 13-3-2001

89. 5-5-1998

90. 34 months

91. 17.

92. K-634/05

93. 13-3-2001

94. 16-6-1998

95. 33 months

96. 18.

97. K-635/05

98. 13-3-2001

99. 8-6-1998

100. 33 months

101. 19.

102. K-636/05

103. 13-3-2001

104. 20-6-1998

105. 33 months

106. 20.

107. K-637/05

108. 13-3-2001

109. 25-10-1997

110. 40 months

111. 21.

112. K-638/05

113. 13-3-2001

114. 25-10-1997

115. 38 months

116. 22.

117. K-639/05

118. 13-3-2001

119. 14-7-1997

120. 44 months

121. 23.

122. K-640/05

123. 13-3-2001

124. 25-2-1998

125. 36 months

126. 24.

127. K-641/05

128. 13-3-2001

129. 22-1-1998

130. 37 months

131. 25.

132. K-642/05

133. 13-3-2001

134. 17-12-2000

135. 3 months

136. 26.

137. K-643/05

138. 13-3-2001

139. 14-7-1988

140. 32 months

141. 27.

142. K-644/05

143. 13-3-2001

144. 23-8-1998

145. 30 months

146. 28.

147. K-645/05

148. 13-3-2001

149. 23-11-1997

150. 41 months

151. 29.

152. K-646/05

153. 13-3-2001

154. 24-12-2000

155. 2 months

156. 30.

157. K-647/05

158. 27-1-1999

159. 20-12-1997

160. 13 months

161. 31.

162. K-648/05

163. 27-1-1999

164. 28-1-1998

165. 12 months

166. 32.

167. K-649/05

168. 25-1-1999

169. 14-1-1998

170. 12 months

171. 33.

172. K-650/05

173. 27-1-1999

174. 29-11-1997

175. 14 months

176. 34.

177. K-651/05

178. 25-1-1999

179. 17-7-1998

180. 6 months

181. 35.

182. K-652/05

183. 27-1-1999

184. 24-12-1997

185. 13 months

186. 36.

187. K-653/05

188. 25-1-1999

189. 25-3-1998

190. 10 months

191. 37.

192. K-654/05

193. 25-1-1999

194. 6-4-1998

195. 9 months

196. 38.

197. K-655/05

198. 25-1-1999

199. 7-5-1998

200. 8 months

201. 39.

202. K-656/05

203. 25-1-1999

204. 28-8-1998

205. 5 months

206. 40.

207. K-657/05

208. 25-1-1999

209. 18-8-1998

210. 5 months

211. 41.

212. K-658/05

213. 27-1-1999

214. 16-9-1998

215. 4 months

216. 42.

217. K-659/05

218. 27-1-1999

219. 28-9-1998

220. 4 months

221. 43.

222. K-660/05

223. 27-1-1999

224. 17-12-1998

225. 1 month

226. 44.

227. K-662/05

228. 22-6-2000

229. 17-6-2000

230. 5 days

231. 45.

232. K-663/05

233. 22-6-2000

234. 24-6-1999

235. 12 months

236. 46.

237. K-664/05

238. 22-6-2000

239. 1-1-2000

240. 6 months

241. 47.

242. K-665/05

243. 22-6-2000

244. 19-5-1999

245. 13 months

246. 48.

247. K-666/05

248. 22-6-2000

249. 23-6-2000

250. 1 day

251. 49.

252. K-667/05

253. 22-6-2000

254. 10-5-1999

255. 11 months

256. 50.

257. K-668/05

258. 22-6-2000

259. 18-7-1999

260. 11 months

261. 51.

262. K-670/05

263. 22-6-2000

264. 26-6-1999

265. 12 months

266. 52.

267. K-671/05

268. 1-7-2000

269. 26-6-1999

270. 12 months

271. 53.

272. K-673/05

273. 1-7-2000

274. 6-4-2000

275. 3 months

276. 54.

277. K-674/05

278. 1-7-2000

279. 23-5-1999

280. 13 months

11. It has been observed with grave concern that in a few cases, notices were issued after 44 and 38 months instead of six months for the reasons best known to the Customs Authorities. In our view such an inordinate delay cannot be ignored where a specific period of six months has been provided under section 32(3) of the Customs Act and thus the factum of delay being a mandatory requirement of law has rightly been considered by the learned Division Bench. Even otherwise, the question as to whether the quantity of oil was manifested or recovered being a question of fact has rightly been determined by the learned Tribunal and besides that the conclusion as arrived at in the order impugned being well based does not warrant interference.

12. Before parting with the judgment, we have observed with anguish that a huge loss has been caused to Government exchequer mainly due to the negligence of relevant functionaries of the Customs Department against which action must be initiated by the concerned Collector Customs for dereliction of duty and being inefficient which amounts to misconduct and a report in this regard be furnished to the Registrar of this court within a period of one month for perusal of the Bench in chambers.

13. The upshot of the above discussion is that the appeals being meritless are dismissed.

281. M.W.A./C-4/SC Appeals dismissed.