Muhammad Shafi Siddiqui, J. The present bunch of Civil Appeals arises out of Reference Jurisdiction of the High Court under the Customs Act, 1969

(hereinafter referred to as the ‘Act') whereunder a number of questions (mentioned below) have been decided substantially by two judgments of Sindh High Court. The commonality in all references, in terms of questions were:

(1) Whether a motor vehicle, duly registered with the Excise & Taxation Department under the Motor Vehicle Registration Ordinance, 1965, can be detained/seized by the Customs Authorities on the charges of smuggling in terms of Section 2(s) read with Section 156(1)(89) and (90) of the Customs Act, 1969, if the owner is not in possession of the import documents?

(2) Whether the Customs Authorities can ask for production of record, including import documents from owner in respect of a Motor Vehicle or any other importable item, beyond the period of five years in terms of Section 211 of the Customs Act, 1969?

(3) Whether the Registration Book, Customs Auction Documents, Form of Transfer Order, Bank challans towards payments of additional duty and taxes, capital value tax (CVT), registration fee, transfer fee and other charges, unless proved to be bogus and forged, constitute other documents prescribed by or under any law for the time being in force in terms of Section 187 of the Customs Act, 1969?

(4) Whether production of documents as prescribed by or under any law for the time being in force by the owner in respect of a motor vehicle or any other importable item shifts the burden of proof from the owner, upon the Customs Authorities to establish the charge of smuggling through positive evidence or any concrete: material to the contrary, in terms of Section 2(s) read with Section 156(1)(89) and (90) of the Customs Act, 1969?

5. Whether in the facts and circumstances of the case, the learned Tribunal has materially erred in its reading of the evidence, and has misread the same inasmuch as it has failed to draw the correct legal conclusion that necessarily follows from the fact that the vehicle was disposed off by the Punjab authorities by way of an auction and acquired on such basis?

2. For the purposes of present controversy (summarized in references), we should keep in mind that the Reference jurisdiction is contoured to decide the questions of law only arising out of the orders of the last appellate jurisdiction i.e. Tribunal, which is the last fact finding forum.

3. For the sake of brevity Civil Appeal No. 1235/2013 is being treated as leading appeal to answer the questions raised in leave granting order, in which the main judgment dated 15.02.2013 of the High Court of Sindh is impugned/challenged whereby Special Customs Reference Applications

No.263/2010 and 245 and 253 of 2008 were decided.

4. Leaves were granted on 25.09.2013 in some of these Civil Appeals which were filed in the year 2013 and the three questions/points, which were framed were also adopted in the subsequent appeals and are as under:

i) The vehicles which are imported through any route other than those declared under Sections 9 or 10 of the Act would be treated as smuggled goods within the meaning of

Section 2(s) of the Act;

ii) The court had erred in shifting the burden of proof to the authorities whereas under Section 187 as well as under clauses 8 and 89 of Section 156(1) of the Act the burden is on the person who owns or possesses the goods to establish that he had lawful authority or a lawful excuse to possess the same;

iii) None of the vehicles that were the subject matter of the references before the High Court were lawfully imported into the country.

5. We, on the above questions, have heard learned counsel for the parties and perused material available on record. We have also been valuably assisted by Mr. Sirdar Ahmed Jamal Sukhera Advocate, who was appointed as Amicus Curiae earlier.

6. The substantive questions for us as undertaken was/is whether the vehicles, considered by the customs department to have been smuggled, were rightly seized and confiscated, notwithstanding that admittedly they were either bought in "auction conducted by the government" or purchased from the respective owners who had shown the "verified registration books" and that the statutory period, to enquire/demand import documents on the basis of which the registration of some of the vehicles took place, as framed in Section 211 of Custom Act, had lapsed whereas others were registered on the basis of auction reports.

7. The cause to seize and confiscate the vehicles triggered when showcause notices were issued to the individuals having custody of the subject vehicles. It is a common stance of the appellants/department that these vehicles were either smuggled one and/or were shown to have been acquired on fake auction report followed by disputed registration, whereas some of them having chassis number re-punched to match auctioned vehicles' statistics. The ancillary common stance of the appellant/department was that the respondents have failed to produce the import documents as against the registration of the vehicles. Each of the show-cause notices were then taken to its logical end under customs hierarchy i.e. after Order-inOriginal, Order-in-Appeal and order of Appellate Tribunal, the issue finally came before the High Court in Special Customs Reference Applications (reference jurisdiction) wherein the questions were finally answered in favour of the respondents and against the appellants/department in terms whereof the vehicles were released to the respondents, hence these appeals.

8. There are 23 Civil Appeals, the subject matter of which is the seizure of the vehicles and the allegations are common as described above. To cut short the controversy, these petitions are categorized in the following manner with their respective data:

9. A perusal of Section 2(s) and 156(8), (89) and (90) of the Act reflects that clause 8 deals with smuggling whereas clause 89 deals with smuggled goods and clause 90 with goods other than to which clause 89 relates. For the sake of brevity these sections/clauses are reproduced as under:

"Section 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)manufactures 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 one hundred and fifty thousand rupees in value; or

iii)any goods by any route other than a route 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;

iv)essential commodities, as notified by the Board."

156. Punishment for offences.- (1) Whoever commits any offence described in column 1 of the Table below shall, in addition to and not in derogation of any punishment to which he may be liable under any other law, be liable to the punishment mentioned against that offence in column 2 thereof:- ….

…

…..

10. For clause 89 to apply, the condition precedent is that the goods in question should be smuggled one. In terms of Section 2(s) read with the applicable notification thereunder it seems that vehicles can be considered smuggled if either (i) at the relevant time, the applicable notification in terms ofSection 2(s)(ii)included vehicles, or (ii) in terms ofSection 2(s)(iii)the vehicles were brought in by any route other than a route declared under Section 9 or Section 10 or from any place other than the customs station.

11. Motor vehicles were not originally listed in SRO 491(1)/85 dated 23.5.1985 but were added thereto only on 14.09.1998 by means of an amending notification. Keeping this in mind, any vehicle brought into Pakistan before 14.09.1998 could only be considered a smuggled vehicle if it is established that it was brought into Pakistan through a route other than the routes permissible under Section 2(s)(iii). There cannot be a simple answer that since original import documents were neither available with customs nor with the one having custody of the vehicle or motor registration authority, therefore, it is the smuggled one as the application of Section 211 of the Act has its own effects. For ease of understanding we give references of some vehicles. In SCRA No. 263 of 2010, the model year of the vehicle was 1986 and it was seized in 2008; in SCRA No. 245 of 2008, the model year of the vehicle was 1991 and it was seized in 2006, in SCRA No. 253 of 2008 the model year of the vehicle was 1991 and it was seized in 2005. These are subject matters of Civil Appeal No.1235 of 2013. All the vehicles have been registered with Motor Registration Authority (MRA) as shown in the chart above. Indeed, neither model year nor its registration could give exact date of arrival of vehicles to Pakistan however the effect of Section 211 is imperative as the burden is heavier on appellants to demonstrate above facts.

12. For the amended SRO's effect, (wherein vehicles were included), the record of import is required to be kept in terms of Section 211(2) for a period of five years ("five" was substituted for the word "three" by the Finance Act, 2007). For the sake of brevity, such provisions of law is reproduced as under:

"211.Maintenance of record. All importers, exporters and claimants of duty drawback, refunds or any notified concessions, terminal operators, owners of the warehouses, customs agents and the licensed customs bonded carriers, transport operators and tracking companies, carrying out business under this Act or rules made thereunder or under any other law, directly or indirectly, relating to international trade, shall be required to maintain and keep records and correspondence concerning import, export and transit trade transactions.

(2) The records required under sub-section (1) shall be kept for a period not less than five years in such form as the Board may by notification in the official gazette, specify.

(3) The provision of sub-section (1) shall not be applicable to the baggage of the passengers and crew of the conveyance and to the recipients of gifts."

13. The consequence of this provision appears to be that if the auction of the vehicle took place more than 3 years ago for cases prior to the Finance

Act, 2007 and 5 years for cases thereafter, there would appear to be a "lawful excuse" to the person (retaining the possession of vehicle under valid registration), who is accused of an offence under Section 156(89) or (90) (for not showing required import documents), unless it can be demonstrated that he was told or knew that duties and taxes were not paid and the same were required to be paid.

14. For auctioned vehicles such as in SCRA No. 263 of 2010 (Civil Appeal No.1235 of 2013), the vehicle in question was auctioned on or about 25.11.1999, having registration No.BD-0689 dated 24.06.2005 and was intercepted on or about 09.10.2008. In these circumstances, Section 211(2) seems to provide a "lawful excuse" since no adverse inference for failure to produce the documents can be drawn after the lapse of period provided in Section 211(2) to be counted at-least from date of registration if not before, as auction date in other vehicles is also a legitimate claim to count time. The vehicle in question was in Pakistan on or about 25.11.1999, i.e. the date of auction, and the said period expired before the vehicle was intercepted on or about 09.10.2008. There does not appear to be anything on the record to suggest that as per the terms of the auction, the auction purchaser had to pay duties and taxes applicable in respect of the import of the auctioned vehicle. Similarly, in all other cases where (not auctioned cases) the registration record with Motor Registration Authority and registration books (duly verified) are available, the subject period of 3/5 years would apply to give beneficial effect of Section 211 to those having custody and registration in their names.

15. The provisions of Section 174 of Income Tax Ordinance 2001, for present controversy ispari materiato Section 211 of the Act. The provisions of 174 of the Ordinance was discussed at length in Panther Sports[1]specially in para-5. Since the two provisions arepari materiatherefor by applying doctrine of statutory construction there cannot be a different interpretation of section 211 of Act than the one given in the said judgment for section 174 of the Income Tax Ordinance, 2001.

16. So in cases of registered vehicles, if at the time the vehicle being intercepted, more than 3 years have elapsed for cases prior to the Finance Act, 2007 and 5 years for cases thereafter, the defence of "lawful excuse" appears to be indefeasible. This is also because it is reasonable to assume that if a vehicle stands registered, the government is presumed to have exercised due care and diligence with respect to its obligation to see whatever duties and taxes as payable to the government before a vehicle can be registered, stand paid. It must also be noted that the vehicles being registered, which registration was duly verified, is presumed to have been brought lawfully; after completion of notified period in case of used vehicles also. It seems harsh, to say the least, if without any proof that a person (last owner) was involved in the registration of the vehicle knowing fully well that no duties and taxes, as required under the law, were paid, and that therefore the vehicle was fraudulently registered, the vehicle be seized from him on his failure to produce documents of import and payment of duties and taxes thereon and even that beyond the period of three years or five years, as the case may be, as required under section 211(2). In most of the cases since first registration, the vehicles changed many owners on the strength of registration book and no adverse inference could be drawn for the ultimatebonafideowners unless otherwise proved contrary by appellant, in which exercise the appellant department has failed below. The verified registration book and official record is enough forbonafidepresumption that a valid title exist.

17. The Motor Vehicle Ordinance, 1965 provides the mechanism for registration of motor vehicles in terms of its sections from 23 to 43. Section 27 of ibid law even provides the production of the vehicle at the time of registration and if the registration of a vehicle passes through this statutory process conducted by officials responsible under M.V.O 1965, then presumption of truthfulness is eminent.

18. One must bear in mind that there is a distinction between the expression "lawful authority" contained in Section 187 and the expression "lawful excuse" contained in clause 89 of Section 156 (1). The distinction in both is reproduced as under:

19. To apply Section 187 to clauses (89) and (90) of Section 156 would amount to limit or narrow down the scope of what is permissible under the said clauses of Section 156 of the Act as a defence; and that cannot be done.

The legislature was conscious while using the two legal phrases which have different connotation. Section 187 in general deals with burden of proof as to lawful authority whereas Section 156 deals with punishment for offence. In this context, Section 187 can be regarded as a general provision whereas clauses (89) and (90) are specific provisions and in such a situation the specific provisions (to the context) must apply to the event/situation under discussion. As such, the accused persons are entitled only to demonstrate a lawful excuse to discharge themselves from the allegation under the said clauses even where the law is conceived to have been violated in respect of the goods i.e. the goods are smuggled goods in absence of import documents, and that is possible courtesy statutory period, (disclosed in Section 211) followed by registration book through an official act under the law. A strong presumption is thus attached as a statutory act was performed in the registration of vehicle.

20. The distinction between lawful authority and lawful excuse was highlighted by the Privy Council in the judgment reported as PLD 1955 PC 29 by holding that the defence of lawful excuse may be sufficiently proved although no lawful authority exists for doing what is charged against the accused. Lawful excuse is an expression that is of wider import and lesser degree of burden than lawful authority. It follows from this that proving a lawful excuse, which falls short of lawful authority, it is the excuse put forward by the accused, rather than handling smuggled goods, that must be shown to be lawful.

21. Conceiving the events discussed in show-cause notices with above analysis as a common tool, it demonstrates that the vehicles in question are actually those which were registered through a statutory process and were duly verified and hence would carry lawful excuse.

22. This principle however is distinguished for the case where vehicles were found with tampered chassis and engine numbers. If this is seemingly done to match the statistics of original vehicles auctioned or brought into Pakistan officially having different chassis/engine number, the lawful excuse may not be applicable in case of tampered vehicle. This would not include those vehicles which were acquired via auction report explicitlydisclosing such tampering and tampered statistics. Also at times the engine and chassis numbers are changed which are also excluded from any action, provided it was done with prior permission of the authority under the Motor Vehicles Ordinance, 1965. All this require thorough probe at the end to applicant which again is a question of fact not required to be determined by us afresh.

23. Learned counsel for the responded/department has mainly emphasized that a proper procedure was adopted while initiating confiscation and/or seizure process. Suffice to say that applying right procedure on wrong person and at the wrong time would not serve any purpose, rather is an abuse of process of law and such actions would be of no help for the department to take corrective measure to curb the smuggling. Such actions ought to have been taken at the time when vehicles were being registered. The appellants should workout some collaborated efforts before and at the time of registration of such vehicles so that this menace may come to an end. A proper joint effort in registration may be a way out.

24. Indeed, the respondents in order to achieve their lawful object of identifying the vehicles and subjected them to such exercise, the concerned directorate, on receipt of credible information of a suspected vehicle from authority concerned, including but not limited to Motor Registration

Authority, may take requisite steps. In conducting such exercise a lady custom officer and a lady sepoy should also be aligned to ensure privacy and respect; legal requirement including search under section 162 of the Act be followed and inconvenience to the family must be avoided.

25. The conclusion in the above analysis is that the vehicles in question are those which were either auctioned or were brought into Pakistan and were registered through a statutory process and that the auction papers or registration papers of some other vehicles are not being used fraudulently, however, where it is established that the chassis/engine numbers have been tampered with after auction or registration to match the description of the auctioned or registered vehicle, the lawful excuse is not available.

26. With this understanding the questions have been answered cumulatively and no case for interference is made out and appeals are dismissed.

Announced in open Court on 17 April, 2025 at Islamabad.

[1]Commissioner Inland Revenue v. Panther Sports (2022 SCMR 1135)