P L D 1988 Lahore 563 (PLP)

This judgment will dispose of seven writ petitions W.P.No.1972 of 1986, W.P. No.1973 of 1986, W.P.No.1974 of 1986, W.P.No.1975 of 1986, W.P.No.1976 of 1986, W.P.No.1977 of 1986 and W.P. No.1978 of 1986 filed by the Lahore Textile and General Mills Ltd., Rawal Textile Mills Ltd. , Monnoo Industries Ltd., Jamhoor Textile Mills, Margalla Textile Mills, Olympia Blended Fibres Mills Ltd., and Nishat Mills Ltd. , petitioners, calling in question the orders of the Assistant Collector of Customs and the Deputy Collector of Customs, Lahore. imposing regulatory duty of Rs.5 per kg. on viscose fiber imported by them under the various Bills of Entries referred to by the petitioners in their petitions, on the basis of Federal Government's Notification No.S.R.O. 430(0/86 dated 30‑4‑1986.

2. The brief facts of the case are that all the seven petitioner Companies imported man‑made viscose fibre from Japan under valid licences granted to them for its import. The particulars as regards .the dates of the letters of credit opened by the petitioners, the dates when the bills of entries were filed at Karachi for in‑bonding and the dates when the bills of entries were filed at the Customs Dry Port at Lahore for ex‑bonding are as under: Name of Date of Letter Date of Date of Company of Credit in‑bonding ex‑bonding at Karachi at Lahore M/s. Lahore Textile 5‑2‑1986 14‑4‑1986 3‑5‑1986 M/s. Rawal Textile 3‑2‑1986 7‑4‑1986 3‑5‑1986 M/s. Monno Industries 6‑2‑1986 31‑3‑1986 3‑5‑1986 M/s.Jamboor Textile 4‑2‑1986 14‑4‑19 86 3‑5‑1986 M/s. Margalla Textile Feb. 1986 4‑3‑1986 3‑5‑1986 M/s. Olympia Blended 3‑2‑1986 4‑‑5‑1986 3-5-1986 M/s. Nishat Mills Feb.1986 2‑4‑1986 3‑5‑1986 Under the Pakistan. Customs tariff Item 56.01, custom duty on man‑made viscose fibre is Rs.20 per kg The federal Government, by Notification No.S.R.0.430(0/86, dated 30‑4‑1986, which appeared in the Gazette of Pakistan Extraordinary, dated 30‑4‑1986,. in exercise of the powers conferred by subsection (2) of Section 18 of the Customs Act, 1969, imposed regulatory duty of Rs.5 per Kg. on man‑made viscose fibre covered inter alia by Item 56.01 of the Pakistan Customs Tariff .

4. When the petitioners applied for the release of their goods from the Customs Dry Port by filing their bills of entries for ex‑bonding after 30‑4‑1986, the Customs authorities claimed the regulatory duty of Rs.5 per Kg. on the imported goods, in addition to the customs duty at the rate of Rs.20 per Kg., which is not in dispute. Being aggrieved by the said action, the petitioners filed writ petitions in the High Court, which are now before me for disposal.

5. This case was partly argued on 31‑1‑1988 by Raja Muhammad Akram, Advocate for the petitioners. Thereafter it was adjourned to 10‑2‑1988 and then to 20‑2‑1988,' 1‑3‑1988, 20‑3‑1988 and 18‑4‑1988, but could not be taken up as the counsel were busy in other Courts. On 12‑6‑1988, the case was argued by Ch. Muhammad Sadiq, Advocate, on behalf of the petitioners. In the morning, Mr. Qadir Ahmad Siddiqi, Advocate for the Customs Authority, appeared to seek an adjournment, but was informed that as the cases had already been adjourned four to five times, they could not be adjourned. When the cases were taken up, nobody was present on behalf of the Customs.

6. On behalf of the petitioners it is submitted that the Federal Government's Notification No.S.R.0 430(1)1$6 dated 30‑4‑1986 was not gazetted, till 7‑5‑1986 and that the Gazette of Pakistan, Extraordinary, dated 30‑4‑1986 purporting to have been printed by the Printing Corporation of Pakistan was printed much later. In this connection it is submitted that when the petitioners filed bills of entries for ex‑bonding with the Customs Dry Port at Lahore on 4‑5‑1986 and were informed of the new regulatory duty of Rs.5 per kg. having been imposed, they were shown no Gazette Notification by the Customs authorities at Lahore and when on 7‑5‑1986 the Additional Secretary of the All Pakistan Textile Mills Association addressed a letter to the Manager, Printing Corporation of Pakistan, Islamabad, to supply the Gazette of Pakistan containing the Notification of 30‑4‑1986, the Deputy Manager, Printing Corporation of Pakistan Press, Islamabad, by his noting dated 7‑5‑1986, made on the said letter, stated that he could not supply the Gazette as the Notification would be printed next week. It is, therefore, submitted that the Gazette of Pakistan, containing the said Notification was actually printed after 7‑5‑1986 and not on 30‑4‑1986 and therefore, the regulatory duty, at best, could only be claimed from some date after 8‑5‑1986, depending upon the actual date when the Gazette was actually printed. In this connection Nawab Brothers v. Collector of Customs, Karachi and another (P L D 1977 Kar. 947 at page 948) is relied upon. It is further submitted, relying upon the principle laid down by the Supreme Court in the case of AI‑Samrez Enterprise v. The Federation of Pakistan (1986 S C M R 1917), that the regulatory duty having been imposed after the opening of the letters of credit by the petitioners, they were not leviable to pay the said duty, as a vested right had accrued in favour of the petitioners to import the goods subject to payment of such customs and regulatory duties as were in force on the dates of opening of the letters of credit and not additional customs and regulatory duties that were imposed thereafter.

7. Under section 180) of the Customs Act 1969, regulatory, duties are leviable from the dates specified in the Notifications issued under section 18(2), notwithstanding the fact that the issue of the official gazettes in which such notifications appear to have been published any time after those dates. In this view of the matter, even assuming that the Gazette of Pakistan Extraordinary was printed on or after 8‑5‑1986, as suggested by the learned counsel for the petitioners, the regulatory‑duty would be leviable on and from 30‑4‑1986, which was the date specified in the notification issued under subsection (2) of section 18 of the Act. The effective date for the levy of the regulatory duty under Government's Notification S.R.O.430(1)/86 dated 30‑4‑1986 is, therefore, 30‑4‑1986.

8. In order to determine when Customs duty is chargeable, when it can be assessed and what is the date for determination of rate of duty applicable, sections 18, 25 and 30 of the Customs Act, which are relevant, may be reproduced hereunder: "

18. Goods dutiable,‑‑(I) Except as hereinafter provided, customs duties shall be levied at such rates as are prescribed in the First Schedule and the Second Schedule or under any other law for the time being in force, on‑ (a) goods imported into or exported from Pakistan. (b) goods brought from any foreign country to any customs‑station, and without payment of duty, there transshipped or transported for, or‑ thence carried to, and imported at any other customs -station; and (c) goods brought in bond from one customs station to another." (2) The Federal Government may, by notification in the official Gazette, levy, subject to such conditions, limitations or restrictions as it may deem fit, impose a regulatory duty on all or any of the articles specified in the First Schedule at a rate not exceeding fifty per cent of the rate, if any, specified therein or at a rate not exceeding hundred per cent of the value of such articles, as determined under section 25 and may, by a like Notification, levy a regulatory duty on all or any of the articles exported from Pakistan,‑ (i) in the case of articles enumerated in the Second schedule at a rate not exceeding thirty per cent of the rate specified in the Second schedule or of the amount which would represent the value of such articles as determined under section 25i and (ii) in the case of articles not enumerated in the Second Schedule, at a rate not exceeding thirty per cent ' of the amount which represents the value of such , articles as determined under section 25; (3) The regulatory duty levied under subsection (2) shall (a) be in addition to any duty imposed under subsection (1) or under any other law for the time being in force; and (b) be leviable on and from the day specified in the notification issued under that suosection, notwithstanding the fact that the issue of the official Gazette in which such notification appears is published at arty time after that day‑ (4) Any notification issued under subsection (2) shall, if not earlier rescinded, stand rescinded un the expiry of the financial year in which it was issued.

25. Value of imported and expired goods.‑‑(1) The imported goods shall be taken to be the normal price, that is to say, the price which they would fetch, on the date referred at is to say, 30, on a sale in open market between a buyer and a seller independent of each other. (2) The normal price of any imported goods shall be determined on the following assumptions, namely‑ (a) that the goods brought b sea or land are treated as having been delivered to the buyer at the port of place of importation as the case may be, and that goods brought by air are treated as having been delivered to the buyer at the port of place where they are unloaded in Pakistan or, if the aircraft first lands in Pakistan at some other airport or place without unloading the goods, at such other airport or place; (b) that the seller will bear freight, insurance, commission and all other costs, charges and expenses incidental to the sale and the delivery of the goods at that port, airport or place which will be included in the normal price; (c) that the buyer will bear any duties or taxes applicable in Pakistan which will not be included in the normal Price. (3) where the imported goods to be valued‑ (a) are manufactured in accordance with any patented Invention or any goods to which any protected design has been applied; or (b) are imported under a foreign trade mark or are imported for other disposal or use (whether or not manufacture) under a foreign trade mark; the normal price shall be determined on the assumption that it includes the value of the right to use the patent, design or trade mark in respect of the goods. (4) The value of any exported goods shall be taken to be the normal price, that is to say, the price which they would fetch, at the prescribed time on a sale in open. market for exportation to the country to which the goods are consigned between a Seller and a buyer independent of each other. Explanation.‑‑for the purposes of this subsection, the expression, "prescribed time shall mean the time when the bill of export is delivered under section 131 or when export of the goods is allowed without a bill of the export or in anticipation of the delivery ,of a bill Of export, the time when export of the goods commence (5) The normal price of any exported goods shall be determined on the following assumptions, namely‑ (a) that the goods are treated as having been devoured to the buyer on board the conveyance in which they are to be exported; and (b) that the seller will bear all packing, commission transport loading and all other costs, charges and expenses (including any export duty which may be chargeable) incidental to the sale and to the delivery of the goods on board the conveyance in which they are to be exported and which will be included in the normal price. (6) Where the exported goods to be valued‑ (a) are manufactured in, accordance with any patented invention or are goods to which any protected design has been applied; or (b) are exported for sale, other disposal or use under a Pakistan trade mark or are exported for sale, other disposal or use (whether or not after further manufacture) under a Pakistan trade mark, the normal price shall be determined on the assumption that it includes the value of the right to use the patent, design or trade mark in respect of the goods. (a) that the price is the sole consideration; and (b) that the price is not influenced by any commercial, financial or other relationship, whether by contract or otherwise between the seller or any person associated in business with him and the buyer or any person associated in business with him than "he relationship created by the sale itself (c) that on part of the proceeds of any subsequent re‑sale, oth disposal or use of the goods will accrue, either directly indirectly, to the seller or any person associated in business with him. Explanation II.‑Two persons shall be deemed to be associated business with one another if, whether directly or indirectly, either of them has any interest in the business or property of the other both have a common interest in any business or property of so third person has an interest in the business or property of both them.

30. Date for determination of value and rate of import duty.‑The value of, and the rate of duty applicable to, any imported goods shall be the value and the rate of duty in force‑ (a) in the case of goods cleared for home consumption under section, on the date on which a bill of entry. is presented and that section; and (b) in the case of goods cleared from a warehouse under section 104, on the date on which a bill of entry for clearance such goods is presented under that section: Provided that, where a bill of entry has been filed in advance of the arrival of the conveyance by which the goods have be imported, the relevant date for the purposes of this section shall the date on which the manifest of the conveyance is deliver: Provided further that, in respect of goods for the clearance of which a bill of entry for clearance has been presented and section 104 whether before or after the commencement of the Finance Ordinance, 1979. and the duty is not paid within seven days of t bill of entry being presented, the value and rate of duty applicable on the date on which the duty is actually paid."

9. Under subsections (1) and (2) of section 18 of the Customs Act customs duties and regulatory duties become leviable no sooner the goods inter after are imported into Pakistan or exported thereform. The only question that arises is when can it be said that goods are "imported" into Pakistan, The Supreme Court of Pakistan in East and West Steamship Company v. The Collector of Customs (P L D 1976 S.C.618) held that the word "import" carried the meaning of bringing in" or "to bear or carry into" and an imported article was one which was brought or carried into a country from abroad and it did not necessarily entail the entire process of riling bill of entry discharging the goods from vessel at a wharf, the assessment of the value of the goods and the duty payable on them. No sooner therefore, the vessel touches a Pakistan Port, the goods can be stated to have been imported. Under section 9 of the Customs Act the Central Board of Revenue, by a notification, can declare places which ca n be treated as customs ports or customs airports or land customs stations for the clearance of goods imported. Under section 10 of the Act, the Central Board of Revenue, by notification, can specify the limits of any customs port or station, Under Central Board of Revenue Notification SRO ‑4o.108(1)/83 date 12‑2‑1983, the limits of the customs port of Karachi are laid, which extends some miles outside the Karachi harbour. in these circumstances, no sooner a ship enters the territorial waters of the customs . port of Karachi, goods can be stated to be imported into Pakistan, irrespective of the fact whether the vessel touches the land mass of Pakistan or discharges its cargo at a wharf. Thus, no sooner the goods have entered the territorial waters of the Pakistani customs ports of Karachi, Pasni, Muhammad Bin Qasim, as specified by the Central Board of Revenue under section 10 of the Customs Act, 1969, the goods become chargeable.

10. Section 18 of the Customs Act does not state how and in what manner the value of the goods imported is 'to be assessed and at what point of time the chargeability or leviability of the duty arises. What it only says is that the customs duties and regulatory duties, at rates prescribed in the Act, are to be levied on inter alia goods imported into or exported from Pakistan. Under the Customs Act, chargeability is under section 18, valuation of goods is under section 25 and rate at which the duty is to be assessed is under section

30. These different events may occur at different epochs of time., but unless the goods are chargeable to duty and the taxable even occurs under section 18, the question of valuation of goods under section 25 and calculation of duty payable at any particular rate under section 30 'does not arise. The chargeability is dependent upon the import of good. Chargeability is not postponed, but what is postponed is valuation and collection at particular rate at a later date. (Sue Appear, Private Limited v. Union of India 1986 Tax L.R.2022). Thus, imported goods become chargeable to duty under‑ section 18 when they enter the territorial waters of the customs ports of Pakistan, but their value for the purposes of determining the amount of duty payable under section 25 and the rate at which duty is payable, has to be determined under section 30 of the Customs Act. The reason why chargeability impinges on one day and valuation and rate of duty payable is left to another later date, is because a mass, of goods come into the country in bulk and have to be off‑loaded from vessels, then checked and temporarily stored and delivered to the importers,' after further checking, at an early date, if the importer desires! home clearance, or at some appreciably later date, if the importer desires in‑bonding and clearance later from the warehouse. Since it is easy to check the goods at the final stage of delivery, their valuation for the purposes of determining duty payable and the rate of duty applicable is made conterminous with the date the bill of entry is presented for home clearance or ex‑bonding from ware house, Thus, if on the date the goods reach the territorial waters of the customs ports of Pakistan, no customs duty or surcharge 6 leviable, or if any duty or surcharge is leviable, but the same . stands totally, exempted, the goods would not be chargeable to duty or surcharge. If, therefore, at a later date the importer submits his bill of entry for home clearance or ex‑bonding from warehouse and by this date some customs or regulatory duty is imposed, or the total exemption is partially or totally withdrawn, the importer would not be liable the payment of any customs or regulatory duty, as the goods initially were not chargeable. See Snawhitey v Sytvania & Laxman 1975‑771 Bom L. R. 380 and Synthetics & Chemicals v . S C Countinho 1981 ELT

414. It, however, on the date of import, some customs or, regulatory duty is leviable the goods are chargeable under section 18 and if, therefore, at a later date the importer submits his bill of entry for home consumption. or ex‑bonding from warehouse and by this date the customs or regulatory duty is enhanced, the importer would be liable for the higher customs or regulatory duty as was prevalent on the date when he submitted the bill of entry for home delivery or ex‑bonding from warehouse. (See Apar Private Limited and another v. Union of India 1986 Tax. L.R.2022) Notwithstanding the above view, my attention stands drawn to the case of AI‑Samrez Enterprise v ‑'The Federation of Pakistan (1986 S C M R 1917), where the rule as stated in Shawliney's case and Synthetic and Chemicals' case (supra) has not been followed. Iii Al‑Samrez's case a notification of the Federal Government issued on 8‑6‑1972 exempted all customs duties in excess of 20% ad valorem imports of certain, machinery and spare parts covered by the said notification. by a further notification dated 29‑6‑1970, the Federal Government exempted sales tax payable on such machinery and spare parts. The petitioner‑company by a contract confirmed in writing on 7‑6‑1988, agreed to import 100 metric tons of strained copper wire, subject to letter Of credit being opened by or before 15‑6‑1977. Pursuant t the agreement, the petitioner‑company obtained necessary and opened the letter of credit on 15‑6‑1977. On import licence 11‑6‑1977, the Federal Government amended the earlier notification by raising the ceiling of customs duty payable from 20% to 25% and also imposed a condition that the exemption would only be available on goods imported against an industrial licence. By yet another notification dated 4‑8‑1977, the Federal Government withdrew the exemption from sales tax. The petitioner's goods arrived at Karachi port on 13‑9‑1977. They were cleared on some date after this date. The Customs claimed customs duty at 25% ad valorem and the sales tax. The Supreme Court of Pakistan held that the petitioner‑company; was not liable to pay anything more than 20% customs duty, on, the basis that the petitioner‑company had acquired a vested right to the exemptions in terms of the earlier notification and they were not liable to be deprived of the same by virtue of subsequent notification that appeared after the contract stood concluded. In this case, the attention of the Supreme Court was not drawn to the underlying principles flowing out of sections 18, 25 and 30 of the Customs, Act, 1969 nor were Shawliney's case, Synthetic & Chemical's I case and Apar Private Limited Company's case cited before it If the fate of the present petitions had depended only on the rule stated in these 'three Indian cases, I would have followed the obiter dicta laid down by the Supreme Court of Pakistan in Al‑Samrez's case, but since the fate of these petitions is not dependent on the rule stated in the Indian cases, I would leave the matter as it stands, hoping that the Supreme Court of Pakistan at some future date will resolve this matter. 11‑A. A reference to Chapter XI of the Customs Act shows that and importer may choose to have his goods released for home consumption within thirty days they are off‑loaded at the port at Karachi or are received at the Customs Dry Port at Lahore, or have them in‑bonded (stored) in a warehouse at Karachi or Lahore for some length of time and take delivery thereafter within a year, or such extended. Time may be granted' by the Collector or the Central Board of revenue. Where he desires to have the goods released for home consumption he presents the bill of entry for home clearance within the aforesaid thirty days and no sooner the duties and penalties are paid thereon, the goods are released. In case goods are cleared for home consumption, the rate of duty leviable is that on the date on which the bill of entry for home clearance is presented. In case goods are in‑bonded (stored) in the warehouse for some length of time, the goods are released from the warehouse when an application for ex‑bonding is made in that behalf under section 104 of the Act. In such a case, the rate of duty leviable is that which is in force on 'the date on which the bill of entry for clearance of such goods presented under section

104. In the instant case, bills of entry for in‑bonding were filed. Goods were transported to the Custom dry Fort at Lahore, from where they were cleared, when bills of entry for ex‑bonding were filed. In all these cases the bills of entry for ex‑bonding were filed on 3‑5‑1986. In view of clause (b) of section 30 of the Customs Act, 1969, the value of, and the rate of duty applicable to, the imported goods were the value and the rate of duty in force on the date on which the bills of entry for clearance of the goods from the warehouse under section. 104 were presented. This date being 3‑5‑1986, rate of duty as applicable on the said date was leviable, which included the regulatory duty of Rs.5 per kg. The petitioners, therefore, are liable for the payment of regulatory duty. If any authority is required for this view, Messrs Parkash Cotton Mills (P) Ltd ‑ v.. B. Sen and others (AIR 1979 S C 675) may be referred.

12. With regard to the rule stated in the case of ‑Al‑Samrez Enterprise, the same is not applicable to the cases in hand. Al‑Samrez's case relates to the benefit accruing to an importer through an exemption notification. In the instant cases there is no exemption notification from which the petitioners can derive any benefit. The case is simply one where regulatory duty has been imposed, in addition to the Customs and other duties already in force, and the question only is from which date the regulatory duty is applicable. The case of AI‑Samrez Enterprise, therefore, does not assist the petitioners.

13. For the foregoing reasons, the orders of the Customs authorities Imposing regulatory duty are legal and proper and no interference in the constitutional jurisdiction is called for. The several writ petitions are dismissed with costs. Rupees Two Thousand (Rs.2,000.) is fixed as counsel's fee in each, case, which ‑ shall be paid to the respondents. M.B.T./L-36/L Petition dismissed.