1997 PLP 3161 (MLD)

Mr. Muhammad Ali Saeed learned counsel for the petitioner precisely contended whether Customs Authorities are empowered to charge mark‑up under the Defferment of Import Duty (on Ships for Scrapping) Rules, 1993 in the absence of. any provision in the said Rules authorisation application of mark up. In support of his plea he further argued that a Statute dealing with the fiscal has to be strictly construed and in absence of express provisions any Authority exercising jurisdiction thereunder is not competent either to delete or add any provision therein, if the law has itself not provided so. Reliance was placed on 1973 SCMR 445, PLD 1988 SC 370, PLD 1990 SC 68, 1992 SCMR 663, 1994 SCMR 1393. Learned counsel also made reference to Sub‑rule‑7 of Rule‑5 of the Defferment of Import Duty (on Ships for Scrapping) Rules, 1993 and argued that this rule itself has provided penalty if there is a failure on behalf of Importer to make payment in accordance with schedule specified in Rule 4 of stopping breaking the ship forthwith and he shall not be allowed to avail facility of Defferment of Duty etc. We were also informed that so far Bill of Entry has not been finally returned because of adjudication on question of payment of Regulatory Duty, matter in respect whereof petition is pending adjudication before honourable Supreme Court. On the other hand Mr. M.S. Rakhshani learned Deputy Attorney General stated that under subsection 2 of section 83 of the Customs Act, on account of default in payment of outstanding amount surcharge of 14 % can be imposed by the Competent Authority, Therefore, in exercise of such powers vide impugned letter the Importer petitioner has been called upon to make payment of mark‑up. Thus the order has been passed with lawful authority and jurisdiction. It may be noted that admittedly Bill of Entry submitted by petitioner has not been returned after final adjustment of taxes etc., as the matter concerning payment of Regulatory Duty between the parties is sub-judice before honourable Supreme Court of Pakistan where the civil petition for leave to appeal filed by the Importer is pending. However, interim relief has been granted vide order dated 22‑7‑1996, operative para therefrom has already been re‑produced hereinabove. Now it would be examined that an Importer who has opted to make payment of Import Duty in instalments under the Deferment of Import Duty (on Ships for Scrapping) Rules, 1993 can be considered a defaulter and mark‑up to the tune of Rs.14 % on the outstanding amount can be recovered from him or not. In this behalf cursory perusal of the Deferment Rules revealed that as per rule 4 Importer has been authorised to pay duties leviable on import of Ships for breaking in the following order:‑‑ (a) First instalment of 35 % within 15 days of filing of the Bill of Entry; (b) Second instalment of 33 % within 30 days of payment of first instalment; (c) Third instalment (final payment) of 33 % within 36 days of the payment of second instalment; If an Importer fails to make the payment as per the above schedule he is liable for a penal action under sub‑Rule 7 of Rule

5. For the sake of convenience it is re‑produced hereinbelow:‑ "(7) In case of failure of the Importer to make payment in accordance with schedule specified in Rule 4, he shall be stopped breaking the ship forthwith and shall not be allowed to avail facility of Defferment of Duties payable in respect of the ship for which such Defferment was permissible and no such Deffermnet of Duties shall be allowed to him in future" At this juncture it is worth to note that the fiscal statute which also imposes penalties has to be construed strictly and if statute itself does not contain any express provision of recovery of penalty by implication, it would not be advisable to presume that on account of failure in payment of outstanding dues, such and such penalty can be imposed. In other words if there is any deficiency in the statute it cannot be made good by implication nor a fiscal statute admits extension on the basis of analogies. In this behalf the judgments referred by learned counsel Mr. Muhammad Ali Saeed would be advantageous. In 1973 SCMR 445 in the case of 'Commissioner Agricultural Income East Bengal v. BWM Abdul Rehman Manager Taki Bara Taraf Wards Estate, it was held as under:‑ "But indeed in determining whether or not a particular matter comes within a taxing statute, it is only the letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within the letter of the law, he must be taxed, however great a hardship may thereby be involved but on the other hand if the Crown cannot bring the subject within the letter of the law he is free, however apparent it may be that his case is within what might be called the spirit of Law." PLD 1988 SC 370 (M/s Biswill Spinners Ltd. v. Superintendent Central Excise and Land Customs Circle Sheikhupura and another, relevant para therefrom is re‑produced hereinbelow:‑ "There are three principles of interpretation of statutes which have to be kept in view in resolving the controversy raised in this appear. The firs; of these has been expressed in Maxwell on the Interpretation of Statutes, 12th Edition, p.256 in the following words:‑ "Statutes which impose pecuniary burdens are subject to the same rule of strict construction. It is a well‑settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language, because in some degree they operate as penalties: the subject is not to be taxed unless the language of the statute clearly imposes (he obligation, and language must not be strained in order to tax a transaction which, had the legislature though of it, would have been covered by appropriate words, "in a taxing Act," said Rowlatt J., "one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language use. " PLD 1990 SC 68 'Government of Pakistan v. Hashwani Hotel Limited', relevant para therefrom is reproduced as under:‑ "While dealing with the question of interpreting a taxing Act in the case of Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) K.B. 65 at page 71, Rowlatt, J. observed as follows:‑ "It simply means that in taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied, one can only look fairly at the language used." This is an excellent guideline and can be safely utilised for interpreting a taxing statute. " 1992 SCMR 663 relevant para therefrom is re‑produced hereinbelow:‑ "If we were to accept the contentions of Mr. Iqbal Naim Pasha, we would have to construe the above unambiguous provision of Item No. 11 of the First Schedule to the Central Excise and Salt Act, 1944, in violation of the language used in it by holding that though Rs.45 per hundred weight excise duty on the vegetable products has been imposed by it but at it should be read as to include 12‑1/2% of the sales tax on the value of the goods, which is not permissible under the well‑settled principles of interpretation of statutes. In this behalf, reference may be made to the case of The Commissioner of Agricultural Income‑tax, East Bengal v. B.W.M. Abdur Rahman, Manager, Taki Bara Taraf Wards Estate (1973 SCMR 445), wherein Cornelius, J. (as his Lordship then was) made the following observations:‑ "But indeed, in determining whether or not a particular matter comes within a taxing statute, it is only the letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within the letter of law, he must be taxed, however great a hardship may thereby be involved but on the other hand if the Crown cannot bring the subject within the letter of the law he is free, however apparent it may be that his case is within what might be called the spirit of the Law. As was said by Rowlatt, J., in Cap Brandy Syndicate v. Inland Revenue Commissioner ((1921) 1 K.B. 64): "In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. In Tenant v. smith (1892 A.C. 150) Lord Halsbury said:‑ "In a Taxing Act it is impossible, I believe to assume any intention, any governing purpose in the Act, to do more than take such tax as the statute imposes... cases, therefore, under the Taxing Act always resolve themselves into the question whether or not the words of the Act have reached the alleged subject of Taxation." In the light of above decision by superior Courts we examined the provisions of section 83(2) of the Customs Act. Its plain language suggest that if on the return of Bill of Entry within the period of 30 days outstanding dues have not been paid the Department can claim surcharge at the rate of 14 % as it has been observed hereinabove. Admittedly so far Bill of entry has not been returned to the petitioner, therefore, they even cannot invoke impliedly to the said provision of law, except deterring petitioner/Importer not to carry out the ship breaking and declining him in future not to avail the facility of Defferment Rules no other penalty to recover 14 % mark up dues for Government can be charged from them and the Customs Authorities are not authorised to incorporate such penal clause in Rule 5 of Defferment Rules. Thus the action of respondents claiming 14 % mark up from petitioner is not sustainable. For the foregoing reasons petition is allowed and the demand of respondent No.3 contained in the impugned letter dated 4‑11‑1996 is declared without lawful authority. Accordingly in terms of the prayer writ is issued with costs. A.A./620/Q Petition accepted.