Appeal No. 543/LB of 2005, decided on 15th June, 2005. Versus Appeal No. 543/LB of 2005, decided on 15th June, 2005.

MAIN MUHAMMAD JAHANGIER, (MEMBER JUDICIAL).-- Relating to dispute arisen over sale of Mercedes, Benz Car imported under diplomatic exemptions and after the decision, dated 7-3-2005 given by the Adjudication Officer to pay duty and taxes leviable at the time of sale and penalty of Rs.2,00,000 the learned counsel for the appellant to resolve the controversy in this appeal offered to pay duty and taxes leviable at the prevalent rate in accordance with S.R.O. 1(I) of 2005, dated 1-1-2005 and further requested for lenient view in imposition of fine. The relevant portion of the impugned order, dated 7-3-2005 is as under:

"There is no doubt that the vehicle in question was sold by the Embassy without obtaining prior permission from the Ministry of Foreign Affairs and Central Board of Revenue and it was being used by unauthorized person in clear violation of 'S.R.O. 506(1)/88, dated 26-6-1988. It is accordingly ordered to be confiscated. However an option to redeem the same on payment of duties and taxes leviable at the time of sale, is given to the respondents along with redemption fine of Rs.2,00,000 (Rupees two lac only)."

2. In short the facts of the prosecution case are that the above mentioned vehicle was intercepted on 16-12-2003 in the area of Defence Housing Authority Lahore Cantt. driven by Abdul Muqsit Sheikh, the present appellant. After some legal proceedings the matter was referred for adjudication. Show-cause notice for violation of S.R.O. 506(I)/88 read with sections 19, 20, 21, 32 (2) of Customs Act, 1969 and section 3(1) of Import and Export Control Act, 1950, Letter No. P(iv)- 3-8/2003, dated 24-4-2002 of Ministry of Foreign Affairs and letter No.1(1)2002/Cus-Exam, dated 2-5-2002 of Central Board of Revenue, punishable under sections 156(1), 10(A), 11, 14 and 19 of the Customs Act, 1969 was served to the appellant who resisted it but wished to pay duties and taxes in case his vehicle is released, consequently, the order impugned as mentioned above was passed. Hence this appeal.

3. The offer to pay duties and taxes in accordance with the latest legal position on behalf of the learned counsel for the appellant was accepted by the learned D.R. for the respondent assisted by Mr. Khalid Rashid S.I.O.

4. The dispute left behind is as to whether imposition of penalty of Rs.2,00,000 as redemption fine is in accordance with law or not. The learned D.R. argued that clause 10A of section 156(1) of Customs Act, 1969 is applicable in this situation therefore, the fine imposed by the Adjudication Officer is in accordance with law to which the learned counsel for the appellant did not agree. The point for determination is as to what are that legal consequences in case of violation of S.R.O. 506(I)/88, dated 26-6-1988 which deals with the vehicles brought under diplomatic exemptions. The perusal of this notification reveals that directly or in-directly the legal consequences are not given therefore, the Adjudication Authority would see the express or implied provision of the Customs Act, 1969 or any other law/rules in force.

5. So-far-as clause 10(a) of subsection (1) of section 156 of the Act ibid is concerned, it is provided that if any condition, limitation or restriction imposed by the Federal Government or by the Board for grant of partial or total exemption from customs duties is violated, in respect of the goods on which exemption has been granted, such goods shall be confiscated and the person to whom the exemption was granted shall be liable to pay penalty not exceeding 10 times the value of goods and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding 2 years. It is obvious that clause 10(a) as re-produced above deals with those exemptions which are granted to persons under sections 19 and 20 of the Customs Act, 1969. Meaning-thereby section 10(a) is not concerned with the exemptions granted to the diplomats. Even otherwise it is clear that if restriction is violated by the diplomat, he cannot be punished in any way by a Special Judge.

6. So-far-as the application of subsection (2) of section 32 of the Customs Act is concerned, this section is applicable when the collusion is proved and even in that case the notice would be served within 5 years of the relevant date asking for payment of the amount as required. It appears that even this section is not applicable because it is easy to say that the diplomatic privileges are being misused but it is difficult to prove any short of collusion between the diplomatic and the purchaser.

7. If the Courts are proceeding on a legal track, the decision must be in accordance with law, so the question would arise as to how this dilemma should be resolved. The answer to this legal controversy is found in the provision of subsection (1) of section 156 of the Customs Act, 1969 which reads as under:

TABLE

Offences

Penalties

Section of this Act to which offence has reference.

(1)

(2)

(3)

If any person contravenes any Provision of this Act or any Rule made thereunder, or abets any such contravention or fails to Comply with any provision of ? this Act or any such rule with which it was his duty to comply where no express penalty ? has been provided else-where for ? such contra?vention or failure.

Such person shall be ? liable to a penalty not ? exceeding (twenty five thousands rupees).

General

8. It is obvious that this provision of law is general in nature under which every sort of contravention is covered even the slackness on the part of a person who purchases a vehicle brought into Pakistan under diplomatic exemptions. In such a case of violation of exemptions the purchaser must pay the duties and taxes as required under the law and the penalty shall be imposed under the said provision of law.

9. In view of the discussion above order, dated 7-3-2005 is set aside and the case is sent back to the respective competent authority with direction to make assessment of legal dues and penalty is accordance with slaw as indicated above.

10. This appeal is disposed of accordingly.

H.B.T./478/Tax (Trib.) ???????????????????????????????????????????????? Order accordingly.