1990 PLP 827 (CLC)

In C.P. No.1739/79 the petitioner imported in 1975 wood free writing papers. At the time of entering into contract, opening of letter of credit and shipment of the goods "wood free writing papers" was exempted from payment of customs duty under SRO No.631(I)/75 dated 7th June, 1975. This exemption was later on withdrawn by the Central Government vide Notification No.SRO 980(1)/75 dated 6th September, 1975, and accordingly when the goods arrived at Karachi and bill of entry was submitted for their clearance for home consumption, the Customs Authorities recovered a sum of Rs.32,281 by way of customs duty on the above consignment. The petitioner paid the customs duty under protest and, thereafter, applied for refund of the amount which was refused. After exhausting remedy of appeal available under Customs Act, 1969, the petitioner filed the above petition on 23‑10‑1979.C.P. No.D‑510 of 1986 relates to import of Viscose fibre. The petitioner in this case was granted import licences on 1‑12‑1985 and 22‑12‑1985 which were valid for import for a period of one year from the date of their issue. The petitioner entered into contract for import of Viscose fibre under the above import licence which were shipped under bill of lading dated 31st January, 1986 and 6th February, 1986. Under SRO No.645(1)/85 dated 1‑7‑1985 the customs duty payable on imported Viscose fibre was Rs.20 per k.g. which was raised to Rs.25 per k.g. by SRO No.430(1)/86 dated 30‑4‑1986. Accordingly when the consignment arrived at Karachi and the petitioner submitted bill of entry on 3‑5 1986 for its clearance the customs authorities demanded payment of customs duty at the rate of Rs.25 per k.g. which is chellenged by the petitioner. In C.P. No.D‑172 of 1988 the petitioner entered into agreement for import of 500 metric tons of Soyabean oil on 9‑3‑1986 against two import licences which were issued to petitioner on 26‑2‑1986 and 16‑3‑1986. The petitioner established an irrevovable letter of credit in favour of foreign supplier on 18‑3‑1986 and the consignment was shipped on 31‑7‑1987. Import of Soyabean oil was free from customs duty upto 6‑4‑1986. By notification dated 7‑4‑1986 issued under section 18(2) of the Customs Act, customs duty at the rate of Rs.3,000 per metric ton was imposed on Soyabean oil which was reduced to Rs.2,350 per metric ton by a subsequent notification dated 17‑4‑1986. As a result of the above notifications when the bill of entry was submitted by the petitioner on 10‑9‑1986, customs authorities demanded customs duty at the rate of Rs.2,350 per metric ton on the consignment which is challenged by the petitioner. In C.P. Nos.D‑1204/86, D‑1338/88 and D‑99/87 the petitioners entered into contracts for imports of Palm oil on 10th July, 1986. They also established letters of credit in favour of foreign suppliers in the month of July, 1986. It is alleged that rate of customs duty on imported palm oil at the time of entering into the contract for import of palm oil as well as at the time of opening of letters of credit was Rs.2,350 per metric ton. However, when the consignment arrived and the bill of entries were submitted by the petitioners for clearance of the consignments, the customs duty stood at the rate of Rs.5,450 per metric ton, vide SRO No.890(1)/86 dated 24‑9‑1986 which the petitioners have challenged. In Petitions Nos.505 and 604 of 1988 the petitioners entered into contracts for import of palm oil on 29th February, 1988 and 9th February, 1988 respectively. Letters of credit were opened by them in the month of March, 1988. The consignment arrived at Karachi in April, 1988 in both the cases. It is alleged by the petitioner that at the time they entered into contract for import of palm oil, under notification SRO No.22(1)/88 dated 13‑1‑1988, the customs duty payable on palm oil was Rs.5,250 per metric ton which was subsequently revised under SRO dated 21‑3‑1988 w.e.f. 31‑3‑1988 at the rate of Rs.6,250 per metric ton. Accordingly when the consignments in the above cases arrived at Karachi, in April, 1988 the customs authorities demanded customs duty thereon at the rate of Rs.6,250 per metric ton which is challenged by the petitioner. In Petition No.D‑160/83 the petitioner was granted two import licences for import of cement on 25‑3‑1982 and 10‑6‑1983. Against these import licences the petitioner established two letters of credit on 4‑4‑1982 and 13‑6‑1982 respectively. The consignments in both the cases were, however, shipped by the same ship, under bills of lading dated 31‑1‑1983. Advance bills of entries for clearance of consignments were filed by the petitioner on 14‑2‑1983, while the ship carrying the consignments arrived at Karachi on 27‑2‑1983. Under SRO No.650(1)/81 dated 25‑6‑1981 the customs duty payable on cement was 25% ad valorem which was revised by the Government under SRO No.21(1)/83 dated 10‑1‑1983 to 40%. Accordingly when the consignments arrived at Karachi and petitioner applied for their clearance, the Customs Authorities demanded customs duty at the rate of 40% ad valorem which is challenged by the petitioner. In Petitions Nos.D‑549/83 and D‑637/83 the import licences were granted to the petitioners during the period from January, 1983 to May, 1983. Letters of credit were established by the petitioner in respect of import of cement under the above import licences between the period from March, 1983 to May, 1983. The three bills of lading in C.P. No.540/83 are dated 21‑6‑1983 while in Petition No.637/88 these are dated 2‑8‑1983. Under SRO No.650(1)/81 as amended by SRO 21(1)/83 dated 10‑1‑1983 the customs duty payable on import of cement was 40% ad valorem on the date of contract and the opening of letter of credit by the petitioner. However, when the consignments arrived at Karachi and bill of entry for their clearance were filed, customs duty stood modified to 55% by SRO No.608(1)/83 dated 11‑6‑1983, which is challenged by the petitioners. From the above stated facts it is quite clear that the petitioners in all the above mentioned cases are affected by subsequent withdrawal of exemption by the Government, under section 19 of the Customs Act, which was available at the time they entered into contract for import of the goods in each case. Learned counsel for the petitioners, accordingly, jointly urged that subsequent withdrawal of exemption from payment of customs duty by the Federal Government did not affect their vested right to get the consignment cleared on payment of concessionary rate of customs duty which was prevailing on the dates of contracts in view of the rules laid down in Al‑Samroz's case. With regard to insertion of section 31‑A after section 31, in the Customs Act, 1969 the learned counsel challenged its validity on the grounds already mentioned by us earlier in this order. We will therefore, now consider these grounds. Section 31‑A was introduced in the Customs Act by section 5(2) of the Finance Ordinance, 1988 which reads as follows:‑ "(2) after section 31, the following new section shall be inserted and shall be deemed always to have been so inserted, namely:‑ 31‑A. Effective rate of duty.‑‑(1) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of sections 30 and 31, the rate of duty applicable to and goods shall include any amount of duty imposed under section 18, section 2 of the Finance Ordinance, 1982 (XII of 1982), and section 5 of the Finance Act, 1985 (1 of 1985) and the anti‑dumping or countervailing duty imposed under the Import of Goods (Anti‑dumping and Countervailing Duties) Ordinance, 1983 (III of 1983), and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of letter of a credit in respect thereof. (a) For the purpose of determining the value of any imported or exported goods, the rate of exchange of which any foreign exchange is to be converted into Pakistan currency shall be rate of exchange in force. (a) in the case of goods referred to in clause (a) of section 30, on the date referred to in that clause; (b) in the case of goods referred to in clause (b) of the aforesaid section, on the date referred to in that clause; and (c) in the case of goods referred to in section 31, on the dates referred to in that section." (3) In section 156, in subsection (I) in the table, in column 1, in serial 8, in column 2, for the words "ten years" the words "fourteen years" shall substituted. (4) For the First Schedule, Schedule set out in the First Schedule to this Ordinance shall be substituted." The clear effect of section 5(2) of the Finance Ordinance, 1988, is that by a fiction of law, section 31‑A is deemed to have been incorporated after section 31, in the Customs Act, 1969, from the date of enforcement of Customs Act, 1969. We, therefore, find no force in the contention of learned counsel for the petitioners that section 31‑A has not come into effect retrospectively. One of the important consequences provided by the newly‑added section 31‑A is, that amount of customs duty which may have become payable on imported goods in consequence of withdrawal of the whole or part of exemption or concession from duty whether prior or after conclusion of the contract or agreement for sale of such goods or A opening of letter of credit in respect thereof, became recoverable on such imported goods as provided in section 30 of the Act, notwithstanding anything contained in any other law for the time being in force or any decision of any Court. This clearly meant that the vested right of a party to pay customs duty at concessionary rate under an exemption notification which was in force at the time he entered into contract for import of such goods was taken away by the legislature. It cannot be doubted that legislature in Pakistan is fully sovereign and is competent to legislate both prospectively and retrospectively. However, where a provision of law is enacted with retrospective effect and has the effect of taking away the vested rights such effect can only be produced by express words or a necessary intendment. The fact that section 31‑A has the effect of taking away a vested right and it has come into effect retrospectively is sufficiently borne out by section 5(2) of the Finance Ordinance of 1988 and the language of section 31‑A. The remaining contentions of the learned counsel of the petitioners are covered by the decision in C.P. Nos.D‑1016 and 1338/88, with which we fully agree. We may mention here that Petitions Nos.D‑316 and 356 of 1986 were also heard alongwith the remaining petitions mentioned above. However, these two petitions are quite distinguishable from the rest of the petitions as would appear from the facts which are stated herein below:‑ In Petition No.D‑316/86 the petitioner was granted two import licences dated 2‑5‑1985 and 20‑5‑1985. These import licences were valid for import of cement for a period of one year from the date of their issue. The petitioner claims to have established letter of credit against the above import licences in favour of foreign supplier on 20th May, 1985. However, the invoices and bill of lading in this case are dated 17‑3‑1986 and 12‑3‑1986, respectively. Similarly, in Petition No.D‑356/86 the petitioner was granted import licence on 23‑7‑1984 which was valid for import upto 22‑7‑1985. The petitioner claims to have established letter of credit in this case in favour of foreign supplier on 1‑8‑1984. However, the bill of lading and invoices in this case also are dated 12‑3‑1986 and 15‑1‑1985. The petitioner further claims in this case that the consignment was originally shipped on 14‑1‑1985 under a bill of lading of that date but it was later on transhipped to Karachi under another bill of lading issued on 12‑3‑1986. The bills of entry for clearance of the consignment for home consumption in both these cases were submitted by the petitioner in April, 1986. From the above stated facts it is quite clear that the petitioners in these cases are affected by the amendment brought about in the rate of customs duty in respect of cement, by Finance Act of 1985. By a separate order announced by us in Petitions Nos.389, 421 and 422 of 1985 today, we have held that where the rate of customs duty prescribed in the schedule to the Act is varied or altered by a competent legislative Act and such altered and varied rate of duty is operative on the date of filing of bill of entry by the importer, then the importer is liable to pay such altered/varied rate of customs duty in accordance with section 30 of the Act. The aforesaid decision fully applies to these two cases as the Petitioners in these petitions had submitted bills of entry for clearance of the consignments for home consumption long after the amendment brought about in rate of duty in the schedule in respect of cement had become effective. In these circumstances the customs duty demanded by the customs authorities was strictly in accordance with law. As a result of above discussion all the petitions are dismissed but there will be no order as to costs. M.Y.H/A‑631/K Petitions dismissed.