2002 PLP 2792 (YLR)

‑‑‑‑S. 32‑‑‑‑S. R. O. No. 505 (I)/88, dated 26‑6‑1988‑‑‑‑S. R. O. No.561(I)/88, dated 30‑6‑1988‑‑‑Constitution of Pakistan (1973), Art. 199‑‑‑Constitutional petition‑‑‑Demand of regulatory duty‑‑‑Limitation‑‑‑Authority issued notice to petitioner demanding regulatory duty under S.R.O No.561(I)/88 after release of goods on payment of customs duty under S. R. O 505(I)/88‑‑‑Petitioner in reply denied its liability, but authority did not take further action‑‑‑Authority after 3 years issued another demand‑cum‑show‑cause notice and through order‑in‑original found the petitioner liable to pay the duty‑‑‑Appeal filed by petitioner was dismissed and its revision petition met the same fate‑‑‑Validity‑‑‑Proceedings in such case were barred by limitation as prescribed at relevant time under S.32 of Customs Act, 1969‑‑‑First show‑cause notice was served upon petitioner on 20‑7‑1989, while second show‑cause‑cum‑demand notice was issued on 31‑8‑1989‑‑‑Order‑in‑original was passed on 21‑9‑1992‑‑‑First notice, if taken to have been issued within stipulated period of six months, then the proceedings on that notice must have been concluded within a reasonable time‑‑ Department took another 3 years to issue second notice and by implication had superseded their previous notice‑‑‑Purpose of issuance of notice within a stipulated period was to ensure that an individual or the revenue might feel secure after lapse of limitation that matter had come to an end‑‑ Such purpose would be defeated, if Customs Department, after having acted and issued a notice within stipulated period, were allowed to sleep over the matter or drag the same along for years‑‑‑Fixation of period for issuance of show‑cause notice naturally contemplated the completion of proceedings thereon within a reasonable time‑‑‑Such proceedings, if not completed within a reasonable tune, then Customs Authorities would have no legal and moral justification to impose a levy, particularly in cases where there had been no collusion, fraud or misrepresentation on the part of assessee‑‑ Order‑in‑original passed on 26‑9‑1992 was certainly not within a reasonable time from the date of issuance of first notice on 10‑7‑1989‑‑‑Second show‑cause notice issued after more than 3 years was clearly beyond the period of limitation, thus, any order passed on its basis was not enforceable‑‑‑All superstructure built subsequently upon such order suffered from the same infirmity‑‑‑High Court accepted Constitutional petition and set aside impugned orders for having been passed against the express provisions of law. Mushtaq Ahmad Chaudhry for Petitioner. Izhar‑ul‑Haq for Respondents. The petitioner imported a consignment of 590 Kgs. of polyester and plastic films metalized and coated and filed a bill of entry dated 30‑4‑1989. The goods were released to him on 2‑5‑1989 after payment of customs duty at the specified rate of Rs.110 per k.g. per notification S.R.O. 505(I)/88 dated 26‑6‑1988. Subsequently respondent No.5 Assistant Collector Customs issued a show‑cause notice dated 10‑7‑1989 demanding a sum of Rs.96,964 on the ground that the goods, were liable to charge of regulatory duty at a rate of 100% vide S.R.O. 561(I)/88 dated 30‑6‑1988 which was not charged and, therefore, was recoverable from the petitioner Company.

2. In reply the petitioner denied its liability and allegedly did not hear from respondent No.5 for quite some time, who after another three years again issued a demand‑cum‑show‑cause notice on 31‑8‑1992 requiring payment of the aforesaid sum. Finally through order‑in original No. 10 dated 26‑9‑1992 the petitioner was found liable to pay the aforesaid sum. The appeal filed by the petitioner was dismissed on 28‑9‑1993. The same remained the fate of its revision which was dismissed by the respondent No.3 Additional Secretary, Ministry of Finance on 29‑3‑1994.

3. This Constitutional petition seeks to assail the aforesaid two orders of the Customs Authorities and the order passed by the Government of Pakistan in exercise of their revisional jurisdiction.

4. After hearing the learned counsel for the parties, I am inclined to agree that the proceedings in this case were barred by limitation as prescribed, at the relevant time under section 32 of the Customs Act, 1969. The proceedings against the petitioner, it will be noted, were initiated on the basis of audit observation dated 15‑4‑1989. In the first instance the department itself resisted the objection on the ground that since the goods imported by the petitioner fell under heading 3290 of the said S.R.O, it was rightly charged at the rate of Rs.110 per Kgs. Accordingly a request was made to audit wing of the department to drop the proceedings. The first show‑cause notice was served upon the petitioner‑company on 20‑7‑1989 while the second show‑cause cum demand notice was issued on 31‑8‑1992. Finally the order‑in‑original was passed on 26‑9‑1992. Since even in the view of the Department it was a case of inadvertence the notice had to be issued within six months as contemplated under subsection (3) of section 32 of the Customs Act. If the first notice is taken to be within time then there was no need of issuance of second notice on 31‑8‑1992. Also if the first notice is taken to have been issued within the stipulated period of six months then the proceedings on that notice must have been concluded within a reasonable time. The department take another three years to again issue a notice and by implication superseded their previous notice. The second notice' was clearly barred by limitation. It 'is settled law that where no limitation for conclusion of any proceedings' by the executive authorities is fixed such proceedings must be concluded within a reasonable time. It is all the more necessary where law requires issuance of a notice within a particular time. In that case having issued the notice within the stipulated period the executive is required to complete the proceedings within a reasonable time. Obviously where law requires issuance of a notice within six months of the relevant date, as a necessary corollary it expects completion of proceedings on such notice within a reasonable time. By merely issuing a notice within the prescribed time the executive authorities are not absolved of their duty to complete the proceedings within a reasonable period. Issuance of a notice within stipulated limitation does not give an unending period of time to complete the proceedings. The purpose of fixation of limitation for issuance of a notice within a stipulated time is to ensure that an individual or the revenue matters the assessee may feel secure after the lapse of the limitation that the matter has come to an end. That purpose will obviously be defeated if the Customs Department, after having acted and issued a notice within the stipulated period are allowed to sleep over the matter or drag it along for years. The fixation bf period for issuance of show- cause notice naturally contemplates the completion of proceedings on the show- cause notice within a reasonable time. If these proceedings are not completed within a reasonable time, the Customs Authorities will their legal and normal justification to impose a levy. Particularly in the cases where there has been no collusion, fraud or misrepresentation on the part of the assessee.

5. In this case, as noted earlier, if the first show‑cause notice is taken to have been issued within the stipulated period of six months then the order should have been completed within a reasonable time keeping in view the prescribed limitation. As to what time should be reasonable in particular situation will depend upon the facts of each case and will necessarily be relateable to the time of limitation within which the notice was to be issued. In this case the order in original recorded one 26‑9‑1992 was certainly not within reasonable time from the date of issuance of the first notice on 10‑7‑1989. The second show‑cause notice after more than three years was clearly beyond the period or limitation and therefore, any order passed on the basis of such notice was not enforceable.

6. From both angles the order in original dated 26‑9‑1992 does not appear to have been rendered in accordance with law. All super structure built subsequently thereupon also suffers from the same infirmity. The three impugned orders shall, therefore, be set at naught on the ground of their having been passed/recorded against the express provisions of law.

7. Petition stands accepted to that extent. S.A.K./T‑72/L Petition accepted.