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C. A. No.638/LB of 2009, decided on 5th October, 2009.

----Ss. 156(1), Cls. (9), (14) & (14-A)---Punishment for offences--Confiscation of seized goods---Option was given to redeem the goods on payment of redemption fine equal to 30% of the customs value to be appraised and to pay penalty of Rs. 5,00,000---Validity---Order-in-Original was set aside by the Appellate Tribunal so far as it related to the demand of duty and tax in respect of goods which were neither available nor seized---Redemption fine was reduced to 15% of the customs value to be re-determined as ordered by adjudicating officer---Penalty was also reduced to Rs.2,00,000.

----Ss. 18, 79, 80 & 156(1)(43)---Goods dutiable---Levy of duty and taxes on the goods already removed though neither available nor seized, on the ground that all goods imported or brought into Pakistan were liable to customs duty and such goods were also part of the seized consignments as stated by the prosecution on the basis of statement of Manager of Bond---Validity---Recovery memo. prepared by the department in respect of seized goods, which contained the details and particulars of each item, whereas no such description and detail of the goods allegedly taken away by the appellant was available on record---Demand of duty and taxes raised by the department in respect of goods, which were neither available nor seized nor details and description thereof had been brought on record was unjustified and illegal.

----S.156(1)(43)-Punishment for offences---Removal of goods from Port by third persons and subsequently sold to the appellant---Punishment---Validity---Clause (43) of S.156(1) of the Customs Act, 1969 was not applicable so far as the appellant was concerned as admittedly he never got any goods cleared illegally from the Port.

----S.156(1)(43)---Punishment for offences---Show-cause notice---Appellant contended that duty and taxes in respect of goods which were neither available nor seized had been demanded in term of Cl. (43) of subsection (1) of section 156 of the Customs Act, 1969, whereas he was never charged under the said provision of law in the show-cause notice and as such the adjudicating authority had travelled beyond the scope of the show-cause notice which was not permissible under law; such provisions of law even otherwise were not applicable as the appellant never removed the goods from any customs area---Validity---Contention that duty and taxes in respect of goods which were neither available nor seized had been demanded in terms of Cl.(43) of S.156(1) of the Customs Act, 1969, which was not invoked in the show-cause notice was correct-Adjudicating Officer could not travel beyond the show-cause notice---Said clause even otherwise was not applicable, as it was the case of department itself that goods were illegally removed from the Port by third persons---Department was unable to show any document filed by the appellant for clearance of goods in question at Port---Nothing was available on record to establish that the appellant had ever visited the Port---Entire case of the department was based on the statement of third co-accused recorded by the Investigating Officer while they were in custody---Such statements were not admissible in evidence under the law.

----S.179(3)---Power of adjudication---Limitation---Directory or "mandatory provisions---Order" was passed after expiry of limitation---Department contended that although the original order was passed after expiry of limitation prescribed under S.179(3) of the Customs Act, 1969, yet it would not render the same order illegal as the provisions contained in S.179(3) of the Customs Act, 1969 were directory in nature---Validity---Contention that provisions as contained in S.179(3) of the Customs Act, 1969 were directory in nature was not tenable, because where any liability was created the said provision would be mandatory in nature---Orders creating liability passed after expiry of limitation prescribed by law for deciding the case would be illegal. Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector Sales Tax Gujranwala and another 2008 PTD 60; Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector. (Adjudication) Customs Central Excise and Sales and 2 others 2008 PTD 578 and S.T.A. No. 42/LB/2007, decided on 4-6-2008; 2000 PTD (Trib.) 1263 cal.

----S.194-A---Appeal---Limitation---Contention of the Department that delay was caused in passing order due to pendency of writ petition was not tenable, as admittedly the adjudication proceedings were not stayed in the case. Mian Abdul Ghaffar and Malik Muhammad Arshad for Appellants. Saleem Ullah SIO and Mushtaq Ahmad, D.S. for Respondents. Date of hearing 17th September, 2009.

This appeal has been directed against Order-in-Appeal No.165 of 2009, dated 6-6-2009, through which the learned Collector (Appeals), has upheld the Order-in-Original No. 2 of 2009, dated 5-1-2009 passed by the learned Additional Collector. (Adjudication), Lahore. 2. Brief facts of the case are an information was received on 5-7-2007 that some commercial importer"s were involved in massive evasion of duties and taxes by filing fake TPs of electronic goods for transshipment from Model Customs Collectorate, Port Qasim Karachi and they were directly off loading the same at Messrs Tanveer and Company"s Public Private Warehouse Mominpura/Salamatpura, Lahore and Messrs Shalimar Public Bonded Private Warehouse Near Pakistan Mint Lahore. Acting upon the said information the staff of Directorate Intelligence and Investigation, F.B.R. Lahore kept surveillance at the said Warehouses. The information further revealed that some unscrupulous importers did not provide any GD pertaining to the deposit of the goods to the management of the Warehouse. The staff of the Directorate thus seized one consignment of DVD Players on 7-7-2007 belonging to Messrs Japan Electronic at Private Warehouse of Messrs Tanveer and Company and an F.I.R. No. 6 of 2007, dated 7-7-2007 was lodged. Two persons namely Mirza Muhammad and Zia-ul-Haq of Messrs Japan Electronics were arrested, who during investigation disclosed that some consignments of Messrs Al-Bilal Electronic Lahore received through Faisal Shahzad had already been cleared and received by one Ashfaq Khan. They further disclosed that 6 consignments of electronic goods of Ashfaq Khan were still lying at the Bond. As per disclosure of the accused persons, the staff was deployed and the management of the Bond was directed not to deliver the goods to Ashfaq Khan without prior approval of the Directorate. On 12-7-2007 the staff visited Messrs Tanveer Bond and recovered electronic goods pertaining to six imports bearing File Nos. 168/.7, 233/7, 243/7, 291/7 and 289/7. These files were presented by the Manager of the Bond, Perusal of which transpired that the goods in question were belonging to Ashfaq Khan of Messrs Al-Bilal Trading Company. On demand the management of Bond could not produce any documentary proof regarding legal import and as such the same were detained for verification of the import documents and notice under section 26 of the Customs Act, 1969 was issued to Ashfaq Khan to produce the documents of the detained consignments but no one turned-up. Hence, the staff again visited the Bond premises on 17-7-2007 and seized the goods which were detained on 12-7-2007 under section 168 of the Customs Act, 1969. On submission of seizure report the matter was adjudicated by the learned Additional Collector Customs, MCC, Customs House Lahore who vide order, dated 15-12-2008 confiscated the seized goods in terms of Clauses (9), (14) and (14A) of subsection (1) of section 156 of the. Customs Act, 1969. However, an option was given to the appellant to redeem the goods on payment of redemption fine equal to 30% of the customs value to be re-appraised and to pay penalty of Rs.5.,00,000. He has further observed that in terms of section 18 of the Customs Act, 1969, all goods imported or brought into Pakistan were liable to customs duty and as such the goods already removed, though neither available nor seized, were also part of the seized consignments as stated by prosecution on the basis of statement of the Manager of the Bond, therefore, the duty and taxes leviable thereon amounting to Rs.1,19,44,055 shall also be recovered from the appellant under section 156(1)(43) of the Customs Act, 1969 for violation of sections 79 and 80 ibid. The appellant filed an appeal before the learned Collector of Customs, Sales Tax and Federal Excise (Appeals) Lahore, but the same wag rejected vide impugned order, dated 6-6-2009. Hence, this appeal. 3. The learned counsel for the appellant contended that according to the case of the department that it was either Naeem Qureshi or as the case may be Faisal Shahzad who allegedly removed the goods from Port Muhammad Bin Qasim on the basis of Fake TPs and subsequently sold to C the appellant. He further contended that had there been any knowledge on the part of the appellant that seized goods were removed from the customs area without payment of duty and taxes, he would have not stored the same in the public bonded warehouse. He further contended that as per parawise comments filed by the department before the adjudicating officer in this case, it was their own case that the goods were illegally cleared from Port Muhammad Bin Qasim by Naeem Qureshi and Faisal Shahzad and thereafter, they dispatched the same for delivery to respective parties to whom the same were sold by them. He further contended that the duty and taxes in respect of goods which were neither available nor seized have been demanded in terms of clause (43) of subsection (1) of section 156 of the Customs Act, 1969, whereas the appellant was never charged under the said provision of law in the show-cause notice and as such the adjudicating authority had travelled beyond the scope of the show-cause notice which is not permissible under the law. According to learned counsel clause (43) of section 156(1) is even otherwise not applicable so far as the case of the appellant is concerned, as he never removed the goods from any customs area. According to learned counsel the show-cause notice was barred by limitation and the original order was also passed after expiry of the limitation prescribed under section 179(3) of the Customs Act, 1969. The counsel for the appellant also challenged the raid, search and seizure as according to him the same were conducted in violation of sections 162 and 163 of the Customs Act, 1969. They further stated that the redemption fine and penalty are at higher side and also the demand of duty and taxes on the goods, which were neither available nor seized nor under the control of customs authorities was unjustified. The learned counsel, however, shown their willingness to pay duty and taxes on the seized goods as directed by the Adjudicating Authority provided that redemption fine and penalty are reduced to some moderate extent. 4. On the other hand departmental representatives supported the impugned orders on the ground that the goods were removed from Port Muhammad Bin Qasim to hoodwink the law enforcing agencies through misdeclaration on the basis of fake documents and that the same were lawfully seized by the department. They further contended that the appellant is liable to pay duty and taxes on the goods, which he had already taken away from the Bond. They further stated that section 156(1) (43) of the Customs Act, 1969 was correctly applied to the case in hand. However, when confronted that the said provision was not invoked in the show-cause notice they were unable to controvert the assertions of the learned counsel of the appellant. As regards the limitation for issuance of show-cause notice, they stated that proper extension in time was obtained from the learned Collector of Customs, Lahore. However, no such document has been placed on record by the representatives of the department, even on demand by the other side. They further stated that although the original order was passed after expiry of limitation prescribed under section 179(3), yet it would not render the same illegal as the provisions contained in section 179(3) is directory in nature. They further contended that the appellant filed constitutional petition for quashment of F.I.R. and the delay in adjudication was caused due to pendency of the said petition before the Hon"ble Lahore High Court Lahore. 5. We have heard the learned counsel appearing on behalf of the appellant and the departmental representatives and pursued the record. The present appeal has been filed only to the extent of demand of duty and taxes on the goods, which were neither available nor seized nor even examined by the department and the quantum of redemption fine and penalty. As regards the seized goods, the appellant is willing to pay duty and taxes as ordered by the learned Adjudicating Officer provided that the fine and penalty are reduced to some reasonable extent. The contention of the learned counsel for the appellant that duty and other taxes in respect of the goods which were neither available nor seized have been demanded in terms of Clause (43) of section 156(1) of the Customs Act, 1969, which was not invoked in the show-cause notice is correct. The learned adjudicating officer cannot travel beyond the show-cause notice. Moreover, the said clause even otherwise is not applicable so far as the case of the appellant is concerned, as it is the case of the department itself that the goods were illegally removed from Port Muhammad Bin Qasim by Naeem Qureshi and Faisal Shahzad. The representatives of the department were unable to show any document filed by the appellant for clearance of the goods in question at Port Muhammad bin Qasim Karachi. So much so there is nothing on record to establish that the appellant had ever visited the said Port. The entire case of the department is based on the statement of co-accused namely Naeem Qureshi and Faisal Shahzad recorded by the Investigating Officer while they were in custody. Such statements are not admissible in evidence under the law. The learned counsel for the appellant has further taken us to recovery memo. prepared by the department in respect of seized goods, which contained the details and particulars of each item, whereas no, such description and detail of the goods allegedly taken away by the appellant is available on record. Thus, the demand of duty and taxes raised by the department in respect of goods, which were neither available nor seized nor details and description thereof have been brought on record is unjustified and illegal. Moreover, as stated earlier Clause (43) of section 156(1) of the Customs Act, 1969 is not applicable so far as the appellant is concerned as admittedly he never got any goods cleared illegally from Port Muhammad Bin Qasim. The contention of the representatives of the department that the provisions as contained in section 179(3) of the Customs Act, 1969 are directory in nature is also not tenable, because it is by now a settled principle of law that where any liability is created the said provision would be mandatory in nature. As held in case Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd., v. Collector Sales Tax Gujranwala and another 2009 PTD 60 the orders creating liability passed after expiry of the limitation prescribed by law for deciding the case would be illegal. Similar views were taken by the learned Division Bench of Hon"ble Lahore High Court Lahore in case of Messrs Hanif Straw Board Factory through Proprietor v. Additional Collector (Adjudication) Customs Central Excise and Sales Tax and 2 others (2008 PTD 578). This Tribunal has also taken similar view in S.T.A. of 2007 decided on 4-6-2008 (2009 PTD (Trib.) 1263). The contention of representatives of the department that delay was caused due to pendency of writ petition is also not tenable, as admittedly the adjudication proceedings were not stayed in this case. We also feel that the quantum of redemption fine and penalty are excessive. 6. The up-shot of the above discussion is that the appeal of the appellant so far as the demand of duty and taxes in respect of goods which were neither available nor seized is accepted and the impugned order as well as the order-in-original so far as the same relate to such demand are set aside. As regards redemption fine, the same is reduced to 15% of the customs value of be re-determined as ordered by the learned adjudicating officer. The penalty is also reduced to Rs.2,00,000. The appeal stands disposed of accordingly. C.M.A./163/Tax (Trib.) Order accordingly.

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