ASSISTANT DIRECTOR, INTELLIGENCE AND INVESTIGATION, KARACHI vs M/S B.R.

1. SALEEM AKHTAR, J.---These appeal,, with the leave of the Court, challenge the judgments passed by the High Court of Sindh in Constitution petition filed by the respondents which were allowed by the impugned judgment. As the facts and questions of law involved in these appeals are common we propose to dispose them of by this judgment.

2. 2.In Appeal No.38-K of 1991 B.R. Herman & Mota Limited, Respondent No.l, had sought declaration that notice dated 7-9-1986 issued by Assistant Director, Directorate General of Intelligence and Investigation (Customs & Excise), the appellant, was, inter alia, without lawful authority and of no legal effect. Respondent No.l had exported Lining material made of polyster/cotton-blended fabric falling under the category of `Garments and other made up' and 10nfl, cotton canvas products (camping tents) in November, 1983. Similar goods were also exported in November, 1983, by Karim Silk Mills, Respondent No.l in Civil Appeal No.39-K of 191`)1 and Karim Cotton Mills, Respondent No.l in Civil Appeal No.40-K of 1991. Both thes6 respondents had also filed Constitution petition claiming the same relief against notice dated 7-9-1986 issued by the appellant. Respondent No.] in each appeal claimed refund of customs duty and sales tax on the export of consignment of lining material made of polyster/cotton-blended fabrics falling in the category of garments and other made up and 100% cotton canvas (camping tents) under Notification No.SRO 1195(1)/80, dated 1- 12-1980 and SRO No. 135(1)/92 dated 11-2-1982 respectively The Customs Authorities did not process their applie-ation for refund and consequently 3 separate Constitution Petitions No.283/84, 340/84 and 289 of 1984 respectively were filed in the High Court of Sindh. Respondents Nos.2 and 3 filed counteraffidavit and averred that the applications of Respondent No.1 were under scrutiny. The High Court passed order that the amount of refund of customs duty and sales tax which may be found due and payable to the respondent No. 1 (petitioner in the Constitution petition) be deposited in Court which could be withdrawn by them on application. It was further ordered that in case the Respondent No.l was dissatisfied with such determination of the amount of refund of customs duty and sales tax by the customs authorities they could file the statement to that effect whereupon the cases were to be fixed in Court for final hearing. The Custom Authorities paid some amount to Respondent No.] and deposited certain amount in Court which were withdrawn by Respondent No.l. Thereafter the appellant issued notice dated 7-9-1985 to Respondent No.l in these three appeals calling upon them to produce relevant bills of entry regarding import of raw material used in the production or manufacturing of the goods exported by them. Respondent No.l challenged this notice in Constitution petitions before the High Court of Sindh which were allowed by the impugned judgment.

3. It seems that when the dispute arose between the Customs Authorities and Respondent No.l in respect of refund objection was raised that the exported goods on which rebate was claimed were not covered by the relevant notifications under which exemption was claimed. The question was taken up to the Central Board of Revenue which ruled that the goods exported were covered by the notifications. In this background the High Court considered the plea raised by Respondent No.l observing that the claim for refund was allowed by the Collector of Customs, Preventive, Karachi, while the impugned notices were issued by an Assistant Director to the Department of Intelligence and Investigation (Excise & Land Customs) who is much lower in rank to the Collector of Customs. It was finally observed:- "From the material on record it appears that the matter relating to rebate of customs duty and sale tax was not only dealt with by the Collector of Customs but it was also agitated before the Board of Revenue which in its letters dated 19th September, 1985, had directed the Collector of Customs to finalize the claim of rebate of the petitioner in the above cases, in accordance with the decision taken by the Board of Revenue in consultation with the Ministry of Justice & Parliamentary Affairs under SRO 1195(1)/80, dated 30-12-1980. This letter was apparently written by the Central Board of Revenue while previous Petitions Nos.283, 340 and 289 of 1984 filed by the petitioners _in this Court were pending and direction was given to Collector of Customs in the above letter to inform the High Court of the above decision of C.B.R. In these circumstances it will be anomalous to hold that after the decision has been taken by the Collector of Customs on the rebate applications of the petitioners, respondent No.3 was entitled . To reopen these cases. We are accordingly of the view that the impugned notices issued by respondent No.3 to the petitioners in the above cases were wholly without jurisdiction and lawful authority and are, therefore, of no legal effect. These notices are accordingly quashed but the parties are left to bear their respective costs."

3. At the time 'of arguing the petition for leave to appeal the appellant had referred to show-cause notice dated 12th October, 1986, issued by the Assistant Collector, Customs which in fact was not impugned before the High Court. The notice impugned before the High Court was issued by Assistant Director, Directorate General of Intelligence and Investigation (Customs & Excise), dated 7th September, 1986, and for this reason there seems to be discrepancy in the order granting leave to the appellant. However, at this stage we have considered the question pressed by Mr. Shahudul Haque, the learned ASC for the appellant, that the notice was issued under section 26 of the Customs Act, 1969, merely for seeking information which was within the jurisdiction of the. Appellant. It was further contended that the appellant being a different authority was competent to issue this notice notwithstanding the order passed by the Collector of Customs or the Central Board of Revenue. The notice impugned before the High Court reads as follows:- "GOVERNMENT OF PAKISTAN DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, (CUS & EXC), 20-MODERN HOUSING SOCIETY, BLOCK-III, KARACHI-5 C.No.N-4040/86/1915 Dated 7-9-1986 To M/s. B.R. Herman, arid Mohatta Limited, Talpur Road, Karachi Sub:SANCTION OF REBATE FOR RE-PAYMENT OF CUSTOMS DUTY UNDER SECTION 21(C) OF THE CUSTOMS ACT, 1969 AND SECTION 27 (2-A, OF THE SALES TAX, 1951)

4. You exported lining material for shirts to Dubai valuing Rs.1,97,03,091 under _ the following shipping bills numbers and you claimed repayment of customs duty and refund of sales tax paid on the importation of the raw material used in the production or manufacture of the goods exported by you and an amount of Rs.40,39,131 as rebate of customs duty and Rs.2,64,021 as sales tax was claimed and received by you.

5. SHIPPING BILLS NOS.

6. 00283/8-11-1983 00285/8-11-1983 00284/8-11-1983 In exercise of the powers conferred upon the undersigned under section 26 of the Customs Act, 1969, 1 hereby requisite for the ,production of the Bill of entries regarding the import of Raw Material used in the production or manufacture of the goods exported by you.

7. In case you have yourself not produced or manufactured the goods exported then produce the purchase vouchers for the exported goods. . If no reply is received within seven days from the receipt of this notice it will be presumed that no raw material was imported and used in the production or manufacture of the goods exported.

8. (Sd.)

9. (MUNIR QURESHI)

10. ASSISTANT DIRECTOR Copy also affixed on the Notice Board of Customs House, Karachi, under section 215 of the Customs Act, 1960."

11. Similar notices were issued to Respondent No.l in the other two appeals with variation in the number of shipping bills and the amount claimed. As the provisions of section 26 have been pressed in service it would be convenient to reproduce the same:- "26. Power to require information to be furnished.

12. An appropriate officer may, by a requisition in writing, require any person concerned. With the importation, exportation, purchase, sale, transport, storage or handling of any goods which are being or have been imported or exported to furnish such information relating to the goods as may be necessary for determining the legality or illegality of the importation or exportation of such goods, the value of such goods, the nature, amount and source of the funds or assets with which the goods were .Acquired and the customs duty chargeable thereon, or for deciding anything incidental thereto and to produce and allow the officer to inspect and take extracts from or make copies of any invoice, bill of lading, book of acccount or other book or document of whatever nature relating to the goods."

13. Under this provision an appropriate officer has been empowered to require, in writing, information from any person concerned with the import, export, purchase, sale, transport, storage or handling of any goods for the purpose of determining the legality or illegality of such import, export, value and source of funds, and questions incidental thereof. Mr. A.H. Mirza, the learned counsel for the respondents, did not dispute that the appellant is not an authorised officer entitled to exercise power under section 26. Mr. Shahudul Haque, the learned counsel for the appellant, ha's vehemently contended that impugned notice simply required certain information and as it was a preliminary stage the High Court should not have interfered in exercise of its jurisdiction under Article 199. On the other hand, Mr. Mirza contended that the entire question had been decided and settled earlier upto the stage of Central Board of Revenue and, .Therefore, the appellant could not have again investigated into the same question. This argument refers to the proceeding which was initiated by the customs authority against Respondent No.l in respect of the same goods on which claim for refund of sale tax and customs duty was made. The department's main objection was that the refund could not be made as the relevant SRO dated 30th October, 1983, read with SRO of 30th August, 1979, and Ist December, 1979, did not cover the goods exported by Respondent No.l.

14. This question was ultimately decided by the Central Board of Revenue and as stated above the department was asked to refund as S.R.Os. Were applicable to those goods. The contention of the Respondent No.l could be proper provided subsequent action and notice by any authority under the Customs Aat reopens the same question. Section 223 of the Customs Act 1 J(V V Vl.. . -._____ provides that all officers of` Customs and other person employed in the execution of this Act shall observe and follow the orders, instructions and I hodirections of the Board. However, there is a proviso which excludes the applicability of this provision to cases where such instructions will interfere with the discretion of the appropriate officers of Customs in the exercise of their quasi-judicial function. Thus, in all those cases in which Customs Authority exercises a quasi-judicial function, it is not bound by the instructions and directions or orders of the Board which interfere with its judicial discretion. It has to make its own decision on the basis of the facts and circumstances and the law applicable to the case. A close scrutiny of the impugned notice will show that it did not intend to reopen the question which had been decided by the Central Board of Revenue. Central Board of Revenue had decided the applicability of the relevant SROs but it did not decide whether the imports were made in a regular manner or goods were manufactured from imported material and exported on the basis of which rebate has been claimed. Therefore, the nature of notice and inquiry contemplated under it is completely different from the case which was decided by the Central Board -of Revenue referred by the learned Judges of the High Court in the impugned judgment.

4. Faced with this situation, Mr. A.H. Mirza contended that the notice is bad and illegal as it does not show any allegations against Respondent No.l in respect of which any inquiry is to be made and information is required. Mr. Shahudul Haque contended that section 26 empowers the authorities to ask for such information and thus the notice has been issued competently. The object of section 26 of the Customs Act is to empower the authority to ask for information or require the production of documents or inspect the same in order to determine the legality or illegality of .Importation or exportation of goods which have been imported or exported, the value of such goods, the nature, amount and source of the funds or the assets with which goods were acquired and the customs duty chargeable therein or for deciding anything incidental thereto. The authority can only for specific purposes of determining the legality or illegality call for such information as required by section 26. The authorised officer can call upon any importer or exporter to furnish information in case where such determination is required. It cannot make a roving inquiry or issue a notice by merely shooting in the dark in the hope that it will be able to find out some material out of those documents and then charge the party of irregularity or illegality. The authority has to state and disclose in the notice, the purpose for which the party is required to produce those documents or supply information. Unless such purpose is specified in the notice, it will be a matter of anybody's guess and the accused party will be put to inquiry without any specific allegation or fact disclosed to him. It does not permit any authority to employ the provisions of section 26 to make indiscriminate, roving and fishing inquiry irrespective of the fact whether any determination of legality or illegality in import, export or funds wit' which the goods were acquired is 'to be determined. Even in cases of suspicion o commission of illegality, details should be provided to' the party-to enable hin to h,ave'an opportunity to produce all the relevant documents and. Disclose informatio#. Depending on the facts and circumstances of a case,, any notice without disclosing any fact or -particulars, for which information or document: are required will be in violation of the principles of natural justice and may be struck down as illegal and without jurisdiction.

5. For the aforestated reasons; we dismiss the appeals. The appellant will, however, be free if it so desires to-issue fresh notice to Respondent No.l, intimating the allegations and particulars as discussed above.