KARACHI: If an owner comes up with explanation, the burden of proof is shifts on to custom authorities in terms of section 187 of the Customs Act, 1969 and has to be discharged satisfactorily by them.

This was held by a custom appellate bench of High Court of Sindh comprising Justice Muhammad Junaid Ghaffar and Justice Adnan-ul-Karim Memon while deciding  a Special Custom Reference Application filed by Director, Directorate General, I&I (Customs), Hyderabad against M/s. Smart Power System Private Limited.

The Reference Application impunges, the Judgment passed by the Customs Appellate Tribunal, Karachi, in Customs Appeal No.H-990/2017 proposing the following questions of law; i. Whether in consideration of the facts and circumstances of the case the learned Customs Appellate Tribunal while concluding impugned judgment has indulged into non-reading/mis-reading of evidence and failed to take into account that the Respondent (herein) has relied upon irrelevant import/auction documents to legalize the impugned smuggled/non-duty Diesel Generators?  And that  Whether burden of proof of lawful possession as envisaged under clauses (89) of Sub Section (1) of Section 156 read with Section 187 of the Customs Act 1969, can be discharged on the basis of irrelevant import/auction documents?

The bench noted that the goods in question are freely importable and purchased by the respondent from open market who produced the sale purchase receipt. The bench also referred to order of the tribunal which said that during previous hearings in which the departmental representative was directed to verify and  confirm the veracity of the sale/purchase receipt from seller, but despite of so many directions since 2018, the departmental representative has not verified the same nor any statement has been filed in this regard to show that why they did not comply the directions to verify the sale/purchase receipt nor submitted any report or statement/rebuttal regarding veracity of sale/purchase receipt, therefore, the malafide has been shows on the part of respondent department, which resulted in the huge financial loss of the appellant, therefore, the appellant has been able to justify the purchase of goods from open market, and proved his case that the goods do not fall under the definition of Section 2(s) of the Customs Act, 1969. In view of the above, the impugned Order-in-Original was set aside and the appeal was allowed by the custom appellate tribunal.

The SHC custom bench after detailed hearing held that Perusal of the aforesaid finding of the Tribunal reflects that the initial burden, if any, on the Respondent as contemplated under Section 187 of the Customs Act, 1969, was discharged (though to a certain extent only) by stating and producing the sale/purchase receipt from Seller. Once the Respondent offered a reasonable explanation as to the possession of goods in question, which is either acceptable or raised a doubt, in that case the burden was shifted upon the prosecution to establish the case 1. The law is further settled that the burden of proof is shifted in terms of section 187 of the Customs Act, 1969 upon furnishing of documents of purchase upon the Customs authorities and has to be discharged satisfactorily by them. The judgment further said that Record reflects that despite so many directions of the Tribunal, departmental representative failed to verify such receipt/document. In that case the Applicant department is not justified in insisting that the burden as above was not discharged in accordance with Section 187 and that receipts are not relevant or fake. This could have been agitated only if the directions of the Tribunal had been complied with and a contrary finding was recorded. In view of the above, no case for indulgence is made out. Accordingly, all questions are answered against the Applicant and in favour of the Respondent. As a consequence thereof, this Reference Application is dismissed, the judgment said.