Appeal No.55 of 2003, decided on 12th August, 2003. Versus Appeal No.55 of 2003, decided on 12th August, 2003.

MUHAMMAD SULAIMAN, MEMBER (TECHNICAL)/ CHAIRMAN.‑‑ ‑(1). This appeal has been filed against the Order‑in- Original No.1 of 2003, dated 31‑1‑2003 passed by the Additional Collector Customs, Central Excise and Sales Tax (Adjudication), Rawalpindi ,

2. Brief facts of the case as reported by the Deputy Superintendent of Customs Station, Sost, that Messrs Mir-Enterprises Gilgit filed Bill of Entry No.96 of 2002, dated 6‑8‑2002, through Messrs Rabbani Trading Co., Customs Clearing and Forwarding Agents, Sost, at the Customs Station, Sost for the Customs Clearance of a consignment of Misc. Goods, which had arrived there from China through land rout vide I.G.M. No.47 of 2002; dated 18‑7‑2002. The consignment, on examination by the Customs Staff was reportedly found to contain besides the importable items, the following non‑importable goods in terms of the Negative List of applicable Import Policy:‑‑

(i) V.C.Rs (old and used of foreign origin)‑200 Nos.

(ii) V.C.P.s (old and used of foreign origin)‑400 Nos.

3. On demand by the Customs Staff, the importer failed to provide lawful authority for the import of the above non‑importable items. The Customs Staff, therefore, seized the same under proper documentation on account of violation of section 3(1) of the Imports and Exports (Control) Act, 1950 read with section 16 of the Customs Act, 1969 punishable under clauses (1), (8), (9), (14) and (45) of section 156(1) ibid.

4. On the receipt of a seizure report in the case, notices were issued to the said Messrs Mir Enterprises, Gilgit and Messrs Rabbani Trading Co., Customs Clearing and Forwarding Agents, Sost vide C. No. V. Cus. (14)‑36 of 2002/15926, dated 16‑12‑2002 to show cause as to why the seized goods should not be confiscated and why penal action should not be taken against them under clauses (1), (8), (9), (14) and (45) of section 156(1) of the, Customs Act, 1969.

5. Messrs Mir Enterprises, Gilgit submitted their written defence through their counsel, however, Messrs Rabbani Trading Co., Customs Clearing and Forwarding Agents, Sost, failed to file written defence and also failed to attend any of the hearings. In view of the attitude of Messrs Rabbani Trading Co., regarding non‑association in the process of these proceedings and also no appearance on part of the prosecution, the Adjudicating Officer had no option except decision in the instant case on the basis of facts available on record and the relevant applicable provisions of law.

6. The defence arguments advanced in this case on behalf of Messrs Mir Enterprises Gilgit examined and it was observed that the Imports and Exports (Control) Act, 1950 has been extended to the Northern Areas vide Northern Areas Adaptation of Laws Order, 1981, dated 10‑12‑1981. Import of any goods through a notified Customs Station in violation of the applicable laws does not entitle their outright release. In this case the seizure was made on 5‑10‑2002 and the competent authority extended the period for issuance of the show‑cause notice in the instant case upto 20‑12‑2002 under the ‑relevant legal provisions. The show‑cause notice issued in this case on 16‑12‑2002 is therefore, not time‑barred.

7. Consequently, the learned Adjudicating Officer concluded that there appears no restriction on the import of VCRs and VCPs in the Import Trade and Procedure Order, 2000, which has been issued by the Ministry of Commerce vide S.R.O. 489(1)/2000, dated 17‑7‑2000 and is still in force. A perusal of the copy of relevant Bill of Entry No. 96 of 2002, dated 6‑8‑2002, which has been submitted to the Adjudicating Officer along with the seizure report of this case, has revealed that the items, seized in this case, had not been appropriately declared therein. There is, therefore, no doubt that the Importer contravened section 32(1) of the Customs Act, 1969, and this was not possible without the active connivance of the Customs Clearing Agency i.e. Messrs Rabbani Trading Company, Customs Clearing and Forwarding Agents, Sost which filed the bill of entry in the instant case. In view of the above the learned Adjudicating Officer confiscated the goods and also imposed a personal penalty of Rs.80,000.00 on the Importer Messrs * Mir Enterprises, Gilgit and Rs.50,000.00 on Messrs Rabbani Trading Co., Customs Clearing and Forwarding Agents, Sost under section 156(1) of the Customs Act, 1969. However, an option was given under section 181 of the Customs Act, 1969, to the rightful owner of the seized goods to redeem the same on payment of redemption fine equal to 30% of their assessable value in addition to the customs duty, and other taxes leviable therein. Aggrieved by the above order‑in‑original the appellants filed the present appeal on the following grounds:‑‑

(i) That the impugned Order‑in‑Original No. 1 of 2003, dated 31‑1‑2003 passed by the learned Additional Collector of Customs, Central Excise and Sales Tax (Adjudication) suffers from legal infirmities hence not maintainable in the eye of law.

(ii) That the learned Additional Collector of Customs, Central Excise and Sales Tax (Adjudication) has no lawful authority to redeem the impugned goods while exercising option under section 181 of the Customs Act, 1969.

(iii) That the appellant has not been heard altogether and a judgment has been passed against him. Thus, he is condemned unheard. Therefore, the impugned order‑in‑original being ex parte and in conflict with the universally recognized principles of natural justice and judgments of Honourable Superior Courts is not maintainable and non existence in the eye of law.

(iv) That Messrs Mir Enterprises Gilgit, was required to produce any lawful authority for import of the non‑importable goods but they failed to do so, since the mis-declaration of goods resulted in evasion of duties and taxes and that too of old and Used VCRs/VCPs which are notified for the‑purpose of sections 2(s) and 156(2), hence they are also deemed to be smuggled goods. Therefore, the impugned goods were seized. .

(v) That the goods were lawfully seized and all relevant 'legal formalities were completed.

(vi) That the learned Additional Collector of Customs, Central Excise and Sales Tax (Adjudication) granted only two successive opportunities of hearing i.e. 31‑12‑2002 and 16‑1‑2003 to the appellant and decided the case on 31‑1‑2003 without taking into the account the fact that the case was made out by the Customs Staff at Sost far away from Rawalpindi and during those days all sorts of communication to that region was broken down due to heavy rains, snowfall and landsliding. Roads were washed away, thousands of tourists were trapped in the far‑flung areas who were subsequently evacuated by the help of Pakistan Army. In those unavoidable circumstances, it was not possible for the prosecution to pursue the case and attend hearings. Therefore, deciding the case against the appellant unheard is absolutely unjustifiable and without lawful reasons.

(vii) That the learned Adjudicating Authority allowed redemption impugned goods against fine without any lawful authority. The impugned goods could not be redeemed being on the negative list. Reliance is placed on a joint judgment No. 7 (68, 80, 81, 83, 84, 92, 103), dated 3‑4‑2003 passed by the Honourable Appellate Tribunal, Islamabad in appeals filed by Messrs Remanullah etc.; in which it was held "I therefore, dispose of the appeals in the manner that the respondent department is directed to compare the seized goods in with the description of goods given in the Table of S. R. O.‑ 1374(1)/98, dated 17‑12‑1998. Only those seized, goods ‑which are not on the notified list and are freely importable and are also not mentioned in the S.R.O. ibid should be released on payment of duty and taxes without payment of fine/penalty and with regard to remaining confiscated goods the appeals shall stand dismissed."

It was prayed that the impugned order‑in‑original may be modified to the extent that redemption of the impugned goods may not be allowed in lieu of the fine or the leviable customs duty and taxes.

8. On the other band, the respondents argued as under:‑‑

(i) That the seized goods were imported through the notified Customs Station and their clearance was sought by filing proper Bill of Entry.

(ii) That the Imports and Exports (Control) Act, 1950 has not been extended to the Northern Areas and as such the Import Policy and the import restrictions‑ issued thereunder are not applicable in this case.

(iii) That no prohibition in respect of the seized goods has been notified under section 16 of ‑the Customs Act, 1969.

(iv) That mixing of the seized goods with other goods was not possible in view of their quantity.

(v) That the Importer is still ready to pay customs duty and other taxes on the seized goods.

(vi) That the show‑cause notice is time‑barred and as such it is not enforceable. The seized goods are liable to be returned unconditionally under section 168(2) of the Customs Act, 1969.

(vii) That the seized goods have been imported in job lot and stock lot quantity.

In view of the above the counsel for the respondent prayed that the appeal may be dismissed. ,

9. We have gone through the records of the case and the arguments of the appellants and the respondents. The following 3 points need consideration and adjudication:‑‑‑

(i) Whether the show‑cause notice was time‑barred and, therefore, the goods are liable to be released under section 168(2) of the Customs Act, 1969?

(ii) Whether the goods are banned under Appendix "A" of the Import Policy Order, 2000 issued vide S.R.O. 489(1)/2000, dated 17‑7‑2000?

(iii) Whether the goods in question were being smuggled because the same are ‑mentioned in the S.R.O. issued under section 2{s) of the Customs Act, 1969?

10. The position with regard to the above points is as under:‑‑

(i) In this case the goods were seized by the Customs formally on 5‑10‑2002 whereas the show‑cause ‑notice was issued on 16‑12‑2002 i.e. after 2 months and 11 days. No ‑extension appears to have been accorded to the issuance of the show‑cause notice after the statutory period of 2 months. In ‑view‑ of the same the show‑cause notice was time‑barred and, therefore, the goods are liable to be released to the appellants.

(ii) The goods in this case are second‑hand VCRs and VCPs. The same are banned for import under Appendix "C" of the Import Policy Order, 2000, referred above, therefore; these are not covered by S.R.O. 1374(1)/1998 or S.R.O. 374(Ij/2002. However, both the S.R.Os apply in this case on the basis of the same being banned for import but these are not liable to outright confiscation. This outright confiscation applies only to items covered under Appendix "A" of the Import Policy Order, 2000, mentioned above. Therefore, the goods can be released on payment of duties and taxes and on payment of redemption fine to be determined by the Adjudication Officer.

(iii) The appellants have held that the goods are smuggled because these are notified under notification issued under section 2(s) of the Customs Act, 1969, and are banned for import under the Import Policy Order, 2000. The ‑word "smuggle" has been defined under the Customs Act, 1969, as under:‑‑

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, or evading payment of customs‑duties or taxes leviable thereon,‑‑

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

(ii) manufacturers 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 Gazette, which, in each case, exceed (fifty thousand rupees) in value; or

(iii) any goods by any route other than a rout declared under section 9 or 10 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."

Obviously, goods brought through a route other than a rout declared under section 9 or 10 or from any place other than a Customs Station, will be considered as being smuggled. If any goods are being brought into the country through the notified route and a notified Customs Station, these will not be treated as smuggled simply because these are banned for import. Inclusion of an item in the notification issued under section 2(s) of the Customs Act, 1969, does not make an item as smuggled because the notification includes a large number of freely importable items. Secondly, second‑hand VCRs and VCPs are not mentioned specifically in the notification. In view of the same the goods cannot be treated as being smuggled as these were imported through a notified Customs Station i.e. Sost.

11. The upshot of the above discussion is that the goods are ordered to be released on payment of duties and taxes only, as the show‑cause notice is time‑barred. The orders of confiscation are also set aside because of the above and the fact that these goods cannot be treated as smuggled. The appeal of the Customs Department is dismissed.

12. Ordered accordingly.

13. Announced.

C.M.A./325/Tax (Trib.) Appeal dismissed.