1986 PLP 1607 (CLC)

MUHAMMAD ZAHOORUL HAQ, J.‑‑The petitioners had imported different items of hospital equipments in 1976, on the basis of exemption which had been granted to them by the Central Board of Revenue on the basis that they were establishing a hospital which would provide free facilities to the general public. The goods were allowed to be imported by the petitioners free of any duty or sales tax on the basis of the following undertaking given by them in writing to the Customs Authorities on 4‑11‑1976. "The goods covered by the B/E particulars of which are shown above have been imported by Messrs Mid East Medical Centre Ltd., Karachi which shall provide free medical service to the general public approved by the Government of Pakistan under section 60(1) of the Income‑tax Act and these are exempted from the payment of customs duty and sales tax in terms of SRO‑880(1)/75, dated 12‑8‑1975 under 15‑D and is only granted very high priority charitable projects. Copy of these are enclosed. We hereby undertake:‑ (1) that goods referred to above will not be sold and will not be utilized or disposed of other than for the purpose for which they have been received or secured and we bind ourselves to the Collector of Customs to pay the said duties and penalties, if any, in event of a breach of this undertaking. (2) that we shall produce a certificate from the Ministry of Health or the Department of Health concerned that the goods imported have been duly accounted for, within one year of the date of importation."

2. On 9‑6‑1981 the Customs authorities issued a show‑cause notice to the petitioner, as to why action against them under section 32 of Customs Act, 1969 read with section 156(1) (14) of the same Act should not be taken as they had committed breach of the undertaking that the imported goods would be used for providing free medical facilities to the general public. The petitioners showed cause against the said show‑cause notice on 14‑6‑1981. However, there is no mention in said reply that the petitioners were providing free hospital facilities to the general public.

3. The petitioners case is that the Deputy Collector did not accept the plea of the petitioners and passed several orders imposing fine and demanding payment of duty and sale tax against which appeals had been preferred. The counsel has informed that the appeals of the petitioners before Collector of Custom were not accepted, therefore, the petitioners have preferred revision application before the Central Board of Revenue.

4. Independent of the appeals filed by the petitioners to Customs Collector, and during the pendency of those appeals the petitioner made representations to the Central Board of Revenue and asked for relief, on the basis that the Government of Pakistan had allowed several concessions to the hospital and clinic and penal action should not be taken against the petitioners. Incidentally it was also mentioned that the notification 14th June, 1982 should be made applicable to the petitioners who had imported these items more than three years ago. The Central Board of Revenue accepted the representation of the petitioners on 24th February, 1982 emphasising that Rs.66,06 lacs was the duty and taxes recoverable from the petitioners, as worked out by the Customs House, Karachi, it decided that no duty should be recovered in case of items covered by the S . R .0 . , dated 12‑8‑1975. It further allowed a concession of general exemption and/or S.R.O./209/1/Cus/79, dated 3‑3‑1979 in case of some other items. Rest of the items were not allowed exemption by the Central Board of Revenue on the ground of private clinic and hospitals not being allowed such exemptions. The Central Board of Revenue, further directed that no penal action should be taken against the petitioner's hospital for mis-declaration and it further allowed the concession of payment of the duty involved, in easy installments. The Collector of Customs (App:) was directed to finalise the case after discussing the actual figures. Consequently, the Deputy Collector of Customs (App‑III) on 2nd March, 1983, informed the petitioners that Rs.23,82,953 has been calculated to be recoverable from the petitioners, and the same should be paid in the installment of Rs.2 lac per month.

5. There is no grievance made by the petitioners that the appraisement of 2nd March, 1983, was without any notice to the petitioners. In fact paragraph 2 of the said appraisement, dated 2‑3‑1983 shows that the issue was discussed with the petitioners.

6. The petitioners felt aggrieved against the coercive steps which were taken by the Customs Authorities for enforcing the demand made on 2‑3‑1983, and hence this petition.

7. Mr. M.A. Pesh Imam, learned counsel for the petitioners has submitted the originally show‑cause notice of May, 1981 was time‑barred and no action thereunder could be taken. His plea is that the petitioners imported the goods in 1976 and the notice was issued to them on 9‑5‑1981 and since the notice was issued on the ground of misdeclaration having been made by the petitioners, therefore, the time limit of three years prescribed under section 32(2) applied and that time would run from the date of clearance of goods as stipulated under section 32(5)(a).

8. Mr. Liaquat Merchant, the learned counsel for the respondents had submitted that the only order which is now in the field is the order of the Central Board of Revenue, dated 24‑2‑1982, and the consequent appraisement order, dated 2‑3‑1983 and that the penal action under section 32 has already been done away with by the Central Board of Revenue. He further stated that the duty has been imposed under sections 18 and 30 of the Customs Act which allows the imposition of duty on the imported goods. We are in agreement with Mr. Liaquat Merchant that the matter of issuance of notice under section 32 is hardly in issue today as the Central Board of Revenue, acting on the representation of the petitioners itself, have done away with any penalty and they are now demanding only the duty which was levyable upon the goods as agreed by the petitioner in their bond. He has further pointed out that Central Board of Revenue has allowed a concession to the petitioners which was not really available to the petitioners as the said concession was allowed in 1979. He further stated that the further concession of payment of installment has been allowed to the petitioners. We also find that the prayer clause of the petition does not seek any declaration in respect of the notice, which had been issued on 9‑5‑1981.

9. We are of the view that since the penalty is not being imposed upon the petitioners and several concessions have been allowed to the petitioners, even in respect of the duty which was payable in respect of the items imported by the petitioners and the petitioners having secured favourable order from the Central Board of Revenue on its own representations the petitioners are not entitled to challenge the same. We do not find anywhere in the petition or in the other representations made by the petitioners a statement to the effect that the petitioners were providing free facilities to the general public which it had undertaken to do in 1976 and since the exemption from duty, which had been allowed to the petitioners was only on the basis of the said undertaking, therefore, the petitioners cannot challenge the imposition of an ordinary duty upon goods imported by it. We may mention that only at one place in the rejoinder affidavit, the petitioners have stated in para. 9 that it is providing medical facilities on average 10% deserving patients. Even in this statement it has not been stated that facilities provided are completely free. In any case, facilities to 10% patients did not amount to free medical facilities to general public as undertaken by the petitioner in its undertaking. Consequently, we dismissed this petition.

10. Mr. Mushir, petitioners' ‑counsel had submitted that the order of appraisement, dated 2‑3‑1983 was not correct inasmuch as it had calculated the duty as leviable in 1983 and not the duty as leviable in 1976. We are quite sure that if this be the position then the Custom Authorities would take the representation of the petitioners in consideration and Mr. Liaquat Merchant has stated on behalf of the respondents that in case there is any miscalculation in respect of the rate of duty then the Deputy Collector (App.) would certainly go into that question, if proper representation is made by the petitioner. The petition is, therefore, dismissed, with no order as to costs. A.A. Petition dismissed.