2021 PLP 1947 (PTD)

Through this consolidated order, we intend to decide instant Reference Application under section 196 of the Customs Act, 1969 ("the Act of 1969"), along with following connected cases, as common questions of law under identical facts are proposed in connected cases as well:-

1. Customs Reference No. 08 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others

2. Customs Reference No. 09 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

3. Customs Reference No. 10 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

4. Customs Reference No. 11 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

5. Customs Reference No. 12 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

6. Customs Reference No. 13 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

7. Customs Reference No.14 of 2008. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

8. Customs Reference No.15 of 2018. Honda Atlas Cars Pakistan Ltd. v. Appellate Tribunal and others.

2. Through instant reference application, filed against judgment dated 30.11.2007, passed by learned Customs Appellate Tribunal, Lahore ("Appellate Tribunal"), the following question of law, arising out of the impugned judgment, has been pressed and argued for our opinion:- "Whether under the Notification EDB is not vested with the exclusive authority to approve, supervise and determine any defaults under the deletion programs?"

3. Brief facts of the case are that show-cause notices were issued for violation of the provisions of Section 32 (1 and 2) of the Act of 1969, read with SRO 436(I)/2001 dated 18.06.2001, on the allegation that applicant taxpayer has violated the approved Deletion Program and concessionary SRO 502(I)/94 dated 09.06.1994 and SRO.436(I)/2001 dated 18.06.2001, on the import of CKD Kits of cars and even some of the parts/components had already been deleted in the respective Deletion Program by the passage of time. The said show-cause notices were culminated in passing of the orders-in-original, whereby applicant taxpayer was ordered to deposit the evaded/short levied amount of Rs.109,059,952/- (total of all the sums), besides imposition of penalty amounting to Rs.25,000/-, in each case, upon Messrs Raazik International (Pvt.) Ltd. Feeling aggrieved, applicant taxpayer filed appeals before Collector (Appeals), which were dismissed through consolidated order-in-appeal dated 10.05.2006. Being dis-satisfied, the applicant taxpayer second filed appeals before learned Appellate Tribunal, which were also dismissed vide consolidated judgment dated 30-11-2007. The applicant taxpayer has assailed the said judgment through instant and connected reference applications.

4. Learned counsel for the applicant submits that under the Notification, Enquiry Development Board (EDB) is vested with authority to approve, supervise and determine any fault under the Deletion Program, while the jurisdiction has been wrongly exercised by the Customs Deptt., in violation of the said Notification, therefore, the impugned show-cause notices are absolutely illegal and without lawful authority. He further submits that applicant taxpayer is being subjected to double taxation and proceedings for the default in question have already been initiated by the competent authority, which are pending. He adds that the impugned orders are thus not sustainable in the eye of law.

5. On the other hand, learned counsel for respondent department has defended the impugned judgment and submits that the applicant taxpayer has failed to point out any illegality or legal infirmity in the impugned judgment, hence, the same is liable to be up-held under the law.

6. Heard. Record perused.

7. The operative part of impugned judgment is reproduced hereunder: "

9. We have examined the case record. Also heard the arguments of both the sides. Due consideration has been given to the contentions raised by the counsel for the appellant in the memo. of appeal as well as at the time of hearing. The rebutting arguments of the department have also been considered. It is observed that the Federal Government has issued concessionary regime of SROs including the ones mentioned above in order to promote indigenization of different sectors of economy and industrialization in the country by extending the benefit of duty and taxes but subject to strict adherence to the conditions laid down in the relevant SROs. If these conditions are not fulfilled, the purpose of extending benefit of exemption from customs duty and other taxes is forfeited and it creates distortion in economy as well as discrimination. The crucial date for determination of rate of duty, benefit of the SRO, rate of exchange and other valuation aspect is the date of filing of the bill of entry for home consumption and in case of ex-bonding the date of filing of the exbond bill of entry or the date of actual payment of duty if the duty is not paid within seven days of the bill of entry being manifested. At the time of filing of the aforesaid bills of entry for the clearance of the goods in question, the deletion programme in the field was that of "2000-2001 deletion programme" according to which the said components could not be imported and in case of default the clearance of the said components were to attract CBU rate of duty of vehicles. The deletion programme 2001-2002 which is being resorted to by the appellants was not in the field at the time of clearance of the goods. No retrospective effect can be given to any notification in revenue matters. Further, no such effect has been given by the competent authority."

8. Perusal of reproduced part of impugned judgment shows that pivotal questions touching the very jurisdiction of the department / authorities below for initiating the proceedings of show-cause notices, have not been addressed by learned Appellate Tribunal in the impugned judgment. As per clause (3) of the notification referred herein above, the default percentage in the annual indigenization target were to be determined by the EDB, which was purportedly beyond the authority of respondent department to initiate proceedings under the said notification / deletion program. Neither any default had been pointed out by the Indigenization Committee of the EDB, nor consumption of parts by the applicant manufacturer of cars had been determined. Without determination of these facts by the Indigenization Committee, the respondent department, ex-facie, had no authority to issue show-cause notice to the applicant. This material aspect of the matter has been overlooked by the Appellate Tribunal.

9. The other question that EDB conducted audit for the imports made by the applicant during the period 2001-2002 and determined a short fall in meeting the indigenization target. As a result, applicant was served a show-cause notice dated 30.11.2004, wherein the duties and taxes allegedly payable were claimed from the applicant on the basis of audit conducted by the EDB in the year 2001-2002. The allegations leveled in the said show-cause notice were upheld by the Deputy Collector of Customs in order-in-original dated 30.05.2005 and an amount of Rs.146,001,000/- along with penalty of Rs.25048/- was held to be recoverable from the applicant. Feeling aggrieved, applicant preferred appeal before Collector (Appeals) and during pendency of said proceedings, applicant deposited Rs.171,054,000/- under protest, in order to ensure that the imports of applicant were released / cleared at the relevant time. Subsequently, the Collector (Appeals) remanded the case for denovo consideration, which is still pending. The question whether the proceedings can again be re-activated by the respondent department and applicant can be subject to face proceedings twice on the same cause of action, has also not been dilated upon by learned Appellate Tribunal in the impugned judgment.

10. Hon'ble Supreme Court of Pakistan in case of Commissioner of Income Tax, Companies Zone-II, Karachi v. Messrs Sindh Engineering (Pvt.) Limited, Karachi (2002 SCMR 527 = 2002 PTD 419), has already held that any order passed by the Appellate Tribunal, without dilating upon the material aspects of the case, does not constitute proper exercise of jurisdiction by the Appellate Tribunal and in exercise of reference jurisdiction, this Court is vested with the power to take cognizance of the matter and remand it to learned Appellate Tribunal to decide it afresh, after determining the pivotal questions discussed herein above.

11. Since the impugned judgment is non-speaking and material aspects of the case have not been dilated upon by learned Appellate Tribunal, we are inclined to set-aside the impugned judgment and the matter is remanded to learned Appellate Tribunal for its re-adjudication, after providing opportunity of being heard and determination of the facts, under the law, as noted above.

12. In the light of above discussion, this Reference Application along with connected cases, is accordingly disposed of.

13. Office shall send a copy of this order under seal of the Court to the Appellate Tribunal as per Section 196(5) of the Customs Act, 1969. MH/H-5/L Case remanded.