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Appeal No. Cus.334/PB of 2010, decided on 24th December, 2010.

----Ss. 2(s), 15, 16, 156(1)(9), (90) & 194-A---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)---Federal Excise Act (VII of 2005), Ss.26 & 27---Seizure and confiscation of goods---Staff of Customs Anti-Smuggling Unit, on prior information, intercepted a bus and recovered Pakistan made classic cigarettes (fake)----Occupant of bus having failed to produce any proof with regard to legal import or lawful possession of said goods, same was seized under S.15(a) of Customs Act, 1969---On adjudication of the matter, the Deputy Collector of Customs vide order-in-original ordered outright confiscation of the seized goods in terms of S.156(1)(9) & (90) of the Customs Act, 1969---Said order having been upheld impugned order-in-original, appellant had filed appeal before Appellate Tribunal---Seizure report indicated that Pak made classic cigarettes (fake) were recovered from the possession of the appellant, who was travelling in the bus in question---Plea of representative of the department was that cigarettes were fake Pakistan Brand, manufactured outside the country and were brought clandestinely inside the country without payment of duty and taxes---Said representative could not produce any evidence in proof of his plea---Seizure report and the recovery memo had clearly shown that the goods were Pak made classic cigarettes (fake) recovered from "the bus, were manufactured inside the country and were being taken to other parts of the country for consumption---Since the department could not produce any evidence with regard to importation or exportation, provisions of S.2(s) and S.15 of Customs Act, 1969 could not be invoked---Such was neither a case of smuggling nor the case of import/export---Case was adjudicated by the Customs Officer, who was not competent to adjudicate the same---Appeal was also disposed of by an officer not of competent jurisdiction---Impugned orders were set aside and seized goods were allowed to be released, in circumstances. PTCL 2010 St. 1007 ref. Ajoon Khan for Appellant. Yahya Jan, Superintendent and Aziz-ur-Rehman, D.S. for Respondents. Date of hearing: 13th December, 2010.

This appeal has been filed by Afrasayab son of Azad Ali Khan (hereinafter called as the appellant) against the consolidated Order-in-Appeal No.519 of 2010, dated 6-10-2010, passed by the Collector of Customs (Appeals), Peshawar. 2. Precisely, the stated facts as recapitulated from the available case record are that on prior information, the staff of Customs Anti-Smuggling Unit, Kohat, intercepted a bus bearing Registration PRK-6375, at University Chowk, Kohat on 22-4-2010, and recovered Pakistan made Classic Cigarettes (fake) (details as per Recovery Memo. No.32 of 2010, dated 22-4-2010) On demand the occupant of the vehicle namely Afrasayab failed to produce any proof with regard to legal import or lawful possession of the goods, therefore, the same was seized under section 15(a) of the Customs Act, 1969, read with section 26 of the Federal Excise Act, 2005, for violation of sections 2(s), and 15 ibid read with section 3(1) of the Imports and Exports (Control) Act, 1950, punishable in terms of section 156(1) (9) and (90) of the Customs Act, 1969, read with section 27 of the Federal Excise Act, 2005 and section 3(3) of the Imports and Exports (Control) Act, 1950, and the case papers were submitted for adjudication. Consequently, on adjudication of the matter, the Deputy Collector of Customs, Custom House, Kohat Cantt., vide his consolidated Order-ill-Original No.66-67 of 2010, dated 28-7-2010, ordered outright confiscation of the seized goods in terms of section 156(1), (9) and (90) of the Customs Act, 1969, read with section .27 of the Federal Excise Act and section 3(3) of the Imports and Exports (Control) Act, 1950. 3. Being aggrieved of the impugned Order-in-Original, the appellant filed an appeal before the Collector of Customs (Appeals), Peshawar, who vide his consolidated Order-in-Appeal No.519 of 2010, dated 6-10-2010, upheld the impugned consolidated Order-in-Original No.66-67 of 2010, dated 28-7-2010. Hence the present appeal to this Tribunal filed by the appellant on the following grounds:--

(a) that order of the respondent No.1, is illegal, unlawful and against the natural justice and liable to be struck down;

(b) that the appellant"s goods has been seized on specific authorized and declared route under sections 9 and 10;

(c) that the goods are local one and the customs authority has no jurisdiction to seized local made goods;

(d) that the adjudication officer has no jurisdiction to decide such like cases because in the present case there was no violation of the- Customs Act and it is pertinent to mention here that the adjudication officer also have no power under the Excise Act as well as under the Sales Tax Act; and

(e) that the seizing officer has no jurisdiction to seize these goods under the Federal Excise Act and Sales Tax Act, which means the whole seizure was null and void in the eyes of law. 4. On the date of hearing i.e., 13-12-2010, the learned counsel for the appellant repeated the same position as produced vide his memo. of appeal. Additionally, he added that in the first instance there is a question of law as to whether the Commissioner of Federal Excise is empowered to delegate the powers of the officers of Federal Excise to officers of custom. The action taken by .the department is against the provision of Article 4 of the Constitution of Islamic Republic of Pakistan. He also referred to the judgment of this Tribunal, Islamabad Bench in the case of Messrs Global Marketing Services and others v. The Model Collectorate of Customs, wherein the Hon"ble Tribunal has held as under:--

"The Collector of Customs does not have the authority to recover the income tax due. It is only the Commissioner of Income Tax who can start the proceedings of recovery against the person. In case of default, the exercise of jurisdiction by Additional Collector was, therefore, not legal, justiciable and also not within four corners of law. The first point which conies out from the pleading of the parties and front arguments of both the parties whether the Assistant Collector or the Additional Collector had the authority to issue the show-cause notice or corrigendum of show-cause notice or to adjudication upon the show-cause notice under the given power under section 179." 5. He further added that the goods were locally purchased and these were neither being exported nor imported, therefore, implication of Section 16 of the Customs Act, 1969, is ultra vires of the legal position. He also referred to Federal Board of Revenue"s letter C.No.1(16)IRJUD/2009(A), dated 25-11-2009, published in PTCL 2010 St. 1007, wherein the Federal Board of Revenue has specified the jurisdiction of Chief Commissioner Inland Revenue and nothing as such has been mentioned therein regarding the delegation of powers by the Chief Commissioner of Inland Revenue to the customs officer. He also referred to section 24 of the Federal Excise Act, 2005, under which the officers of Police, Customs and Sales Tax are required to assist the officers of Inland Revenue in the execution of that Act as and whenever required by such officers. In the case under reference no such request for assistance was made by the Federal Excise Department. He added that in terms of section 29 of the Federal Excise Act, only those officers specified therein can exercise the powers of Federal Excise Officers and can adjudicate the case and nobody else has the powers to perform these functions. He maintained that the learned Collector (Appeals), has referred to section 156(1) of the Customs Act, 1969, but in this case it is neither import nor export and neither any offence regarding import and export has been committed by him, therefore, invocation of section 156(1) is totally null and void. On the other hand the D.R. contended that the goods are counterfeit and clandestinely brought inside the country, therefore, violation of sections 2(s) and 15 of the Customs Act, 1969, was made due to which the goods were taken into custody by the custom staff. He further added that Collector Sales Tax and Federal Excise, RTO, Peshawar vide his Office Order C.No.ST/Excise/Misc.Fed.Excise. Duty/09/12845, dated 26-10-2009, has empowered the officers of customs of appropriate jurisdiction to exercise the power of Federal Excise Officer under sections 26 and 27 of the Federal Excise Act, 2005. He was of the view that since powers under Federal Excise Law have been delegated to the customs officers therefore,. contention of the learned counsel for the appellant is not based on facts. 6. I have examined the case record and heard both the sides. From the record and arguments put-forward by both the sides the following question arise:

(i) Whether the seized goods are of foreign origin or locally made (fake brand)

(ii) Whether the provisions of section 2(s) read with section 15 of the Customs Act, 1969, are applicable in this case;

(iii) Whether Collector, Federal Excise has the power to delegate the powers of Federal Excise Officers to the Officers of Customs

(iv) Whether the Customs Officers had the jurisdiction to adjudicate the cases of federal excise duty 7. From perusal of the record it transpires that the seized goods were recovered from vehicle No.PRK-6375, coming from Peshawar near University Chowk, Kohat on 22-4-2010. The seizure report indicates that Pak made Classic Cigarettes (fake) were recovered from the possession of Afrasayab son of Azad Ali Khan, who was traveling in the said vehicle. The D.R. at the time of hearing had taken the plea that in fact these cigarettes are fake Pakistani Brand, manufactured outside the country and brought clandestinely inside the country without payment of duty and taxes He, however, could not produce any evidence in support of his arguments and neither could produce any evidence that the seized brand of cigarettes were registered in the name of any of the manufacturer in the country and were manufactured illicitly outside the country and brought with mala fide intention to hoodwink the government revenue. Apparently, the respondent-department could not substantiate their case about its manufacturing outside the country and bringing this with ulterior motives. The seizure report and the recovery memo. clearly shows that the goods were Pak made Classic Cigarettes (fake) recovered from the said vehicle/bus. Since nothing was produced by the respondent in their favour, therefore, it is established that the seized cigarettes are Pak made, manufactured clandestinely by some unscrupulous manufacturers inside the country and were being taken to other parts of the country for consumption. 8. As regard the invocation of section 2(s) and section 15 of the Customs Act, 1969. Perusal of both the Sections indicates as under:

2(s). "Smuggling 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."

(15) "No goods specified in the following clauses shall be brought into or taken out of Pakistan, namely:

(a) counterfeil coins,, forged or counterfeit currency notes, and any other counterfeit products; (b) .. (c) .. (d) . 9. In this case since the respondent-department could not produce any evidence with regard to its importation or exportation clandestinely, therefore, the provisions of section 2(s) and section 15 of the Customs Act, 1969, cannot be invoked. From the plain reading of both the sections it is very clear that these sections would be attracted only when some goods are brought into or taken out of Pakistan clandestinely or evading of customs duties. About the delegation of powers to the customs officers, the D.R. at the time of hearing had taken the plea that Collector, Federal Excise vide his order C.No.ST/Excise/Misc.Fed. Excise.Duty/09/12845, dated 26-10-2009, has delegated the powers under sections 26 and 27 of the Federal Excise Act, 2005, to the officers of customs in terms of Rule-63 of the Federal Excise Rules, 2005. Section 26 of the Federal Excise Act, 2005, empowers the federal excise department to seize the counterfeit cigarettes or cigarettes which have been manufactured unlawfully or on which duty has not been paid as required under the Act, or Rules made thereunder while section 27 empowers the outright confiscation of such cigarettes. Sub-rule (2) of Rule 63 states that every officer of customs empowered by the Collector shall have, use, and exercise all such and the like powers and authority for the search, examination, removal, seizure, detention and confiscation of any vessel, cart, or other means of conveyance, or any horse or other animal, or any goods liable to confiscation under the Act or these rules, as are, or may be, conferred on the like officer of Federal Excise. This subsection empowers the Collector of Federal Excise to delegate the powers of officers of federal excise to officers of customs, but a question arises as to whether Collector has the power to authorize any officer of customs to exercise powers under the Federal Excise Act. A reference is made to subsection (12) of section 2 (before amendment made vide Finance Act, 2010) of by the Federal Excise Act, 2005, which defines Federal Excise Officer as below:

"Federal Excise Officer means any officer of the Federal Excise Department, or any person (including an officer of the Provincial Government) invested by the Board with any of the powers of a Federal Excise Officer under this Act or Rules made thereunder." 10. This shows that powers under the Federal Excise Act can only be delegated by the Federal Board of Revenue (F.B.R.) and no other authority has the power to invest any officer of any department with any of the powers of the Federal Excise Officer under the Federal Excise Act, 2005. This provision of Federal Excise Act, 2005, shows that in the instant case the seizure was made by the customs officers, who were not notified by the Federal Board of Revenue in terms of subsection (12) of section 2 of the Federal Excise Act, 2005 and as such the customs officers were not empowered to seize any goods liable to excise duty. 11. The other aspect of the case is that the adjudication has been made by the Deputy Collector of Customs, Kohat, while appeal was disposed of by Collector of Customs (Appeals), Rawalpindi, Camp Office, Peshawar. Section 179 of the Customs Act, 1969, specifies the powers of adjudication of various officers of Customs in terms of amount of duties and other taxes involved, while the repealed section 31 (which existed at the time of seizure) of the Federal Excise Act, clearly indicates the powers of adjudicating officers of different federal excise officers. Similarly, section 193 of the Customs Act, 1969, also refers to officers of customs and not to the officers of federal excise as well. The D.R. could not produce any notification under which the customs officers were delegated the powers to adjudicate upon the cases wherein duty of federal excise is involved to hear appeals against such orders. Under subsection (1) of section 2 of the Federal Excise Act, 2005, the adjudicating authority has been defined as under:--

"Adjudicating authority means any authority competent to pass any order or decision under this Act or the Rules made thereunder, but does not include the Board or Appellate Tribunal." 12. From this discussion it is thus, crystal clear that the seized goods (fake cigarettes) are Pak made and were being taken inside the country. The seizure made by the customs staff is ultra vires as it does not attract the provisions of section 2(s) and section 15 of the Customs Act, 1969. The contention- of the learned counsel for the appellant that invocation of the provisions of sub-clause (i) of Clause (a) of sub-section (1) of section 156 ibid is not relevant is correct. The said section clearly states as follow:

In this case no proof with regard to its importation was provided by the respondent-department, therefore, the contention of the D.R. that the goods are counterfeit and clandestinely brought inside the country is just presumption. 13. Keeping this discussion in view, it is evident that it was neither a case of smuggling nor the case of import/export of counterfeit/fake products, thus, attracting the provisions of section 2(s) read with section 15 of the Customs Act, 1969. The case was adjudicated by the customs officer who was not competent to adjudicate the cases in terms subsection (1) of section 2 of the Federal Excise Act, 2005. Similarly, the appeal was also disposed of by an officer not of competent jurisdiction. In the light of the above-stated observations, I, therefore, aside the" impugned Order-in-Appeal No.519 of 2010, dated 610-2010 and allow the release of the seized goods subject to the condition that these are not involved inn any other case and that a certificate to the extent that the goods are fit for human consumption is obtained from the relevant authority/laboratory. 14. This order also applies mutatis mutandis to the Customs Appeal No.Cus.335/PB/2010 (titled Afrasayab Khan v. Collector of Customs (Appeals), Peshawar) filed against same Order-in-Appeal No.519 of 2010, dated 6-10-2010. 15. This judgment consists of eight (08) pages and each page bears official seal and signature. 16 Announced. H.B.T./3/Tax(Trib.) Appeal allowed.

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