2012 PLP 180 (PTD)

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN

The complainant has filed application for review of Findings/Recommendations dated 26-3-2011 of Hon'ble FTO in Complaint No.26/Khi/Cust(06)/51/2011.

2. The complainant vide Complaint No.26/Khi/Cust(06)/51/2011 had approached the Hon'ble Federal Tax Ombudsman against withholding of refund of duty and taxes charged on import of medicine 'Tasgina 200mg tab' which the complainant claimed was exempt from duty and taxes under S.R.O. No. 565(I)/2008.

3. The department resisted the complaint and pleaded that exemption of duty and taxes under S.R.O. No.565(I)/2008 was not allowed to Tasgina 200mg tab' till issuance of amended S.R.O. No.391(I)/2010 dated 5-6-2010. According to the Department, prior to issuance of amended S.R.O. the complainant had been seeking special exemption from F.B.R. As the Department could not furnish just cause for withholding decision on the refund application, the Hon'ble FTO recommended as follows: "F.B.R to- (i) direct the Department to decide the refund application filed by the complainant in accordance with law, after affording due opportunity of hearing; and (ii) report compliance within 30 days."

4. The Department vide letter dated 27-4-2011 rejected the application for refund of duty and taxes. The complainant then filed Review application, asserting his claim against illegal levy of duty and taxes on the import of 'Tasgina 200mg tab'. According to him, the medicine was exempt from duty and taxes, vide S.R.O. No.565(I)/2008 which covered all medicines of cancer and the list was illustrative. He pleaded that earlier imports were cleared without payment of duty and taxes under the same S.R.O. In said regard, he referred to GDs KAFU-HC-7364 and KAFU-HC-12433.

5. Secretary Revenue Division was issued notice of the Review application. In response, the Department filed parawise comments, reiterating the plea that the list of medicines issued under S.R.O. No.565(I)/2008 did not include 'Tasgina 200mg tab'. According to the Department, the exemption to the said medicine was extended vide S.R.O. No.391(I)/2010. The Deptt. pleaded remedy of appeal was available to the complainant against the Order-in-Original No.8 dated 9-7-2011. The Department, however, did not explain grant of exemption of S.R.O. No.565(I)/2008 and clearance of consignments of same medicine even before issuance of S.R.O. No. 391(I)/2010 which prima facie supported the plea of the complainant that facility of S.R.O. No.565(I)/2008 was all along available on the import of said medicine.

6. During hearing on 25-7-2011, the DR was allowed 10 days time to provide complete data of import of subject medicine from issuance of S.R.O. No.565(I)/2008 dated 11-6-2008 to S.R.O. No.391(I)/2010 dated 5-6-2010.

7. The Department, vide letter dated 4-8-2011, informed that in eight consignments of subject medicine imported from 11-6-2008 to 5-6-2010, six were cleared from Karachi Air Freight Unit and one from Lahore Air Freight Unit. While six consignments cleared at Karachi were allowed exemption under S.R.O. 565(I)/2008, the one consignment cleared at Lahore was granted special exemption by F.B.R. However, the 8th consignment cleared from Islamabad Air Freight Unit had to pay duty and taxes. The Deptt. pleaded that the benefit extended in six cases was irregular.

8. After due consideration, it is observed that under S.R.O. No.565(I)/2008 cancer medicines were exempted from duty and taxes, and an illustrative list issued. While the list did not specifically mention the subject medicine, the complainant contended that under S.R.O. No.565(I)/2008 all medicines for treatment of cancer were exempted, including "Tasgina 200mg tab", the list being illustrative only. The Departmental report that out of eight consignments imported during the period of enforcement of S.R.O. No.565(I)/2008, seven were granted exemption obviously supported the complainant's contention. After the filing of the Review application, the Deptt issued Order-in-Original dated 9-7-2011, rejecting refund on the ground that the subject medicine was not included in the illustrative list issued under S.R.O. No.565(I)/2008. The Department, however, could not advance any reason for grant of exemption in seven imports of the same medicine, while S.R.O. No.565(I)/2008 was in the field. The plea that benefit extended was irregular amply showed that the Departmental interpretation of S.R.O. No.565(I)/2008 widely varied from Karachi to Lahore to Islamabad, and there was no uniformity across Pakistan.

9. Allowing benefit in seven cases and denial in one case being patently discriminatory is tantamount to maladministration under section 2(3) of the FTO Ordinance, 2000. Recommendations:

10. F.B.R. to- (i) decide the Collector of Customs, MCC, Islamabad to reopen the Order-in-Original No.8 dated 9-7-2011 and allow due refund of duty and taxes, as per law; (ii) take steps to ensure that all S.R.Os. are uniformly applied across Pakistan; and (iii) report compliance within 30 days. C.M.A./232/FTO Order accordingly.