2005 PLP (Trib (PTD)

SARFRAZ AHMAD KHAN, MEMBER (TECHNICAL).‑‑ This appeal is directed against Order‑in‑Original No. 9 of 2000, dated 10‑5‑2000 passed by Collector Customs, Sales Tax and Central Excise Multan. The appellants filed Writ Petition No. 4425 of 1997 in Multan Bench of the Hon'ble Lahore High Court for the purpose of refund of regulatory duty collected by Multan Customs Authorities on the import of various goods. The Hon'ble High Court vide its order, dated 27‑5‑1999 disposed of the writ petition on the ground that "the controversy on the legal premise has already been settled by the Hon'ble Supreme Court in 1999 SCMR 412" and therefore, directed the petitioner to approach the respondents to decide the case in the light of the said judgment of the Hon'ble Supreme Court of Pakistan. Pursuant thereto Project Director Thermal Power Station Muzaffargarh submitted refund application to the Collector Customs Multan on 10‑7‑1999 and subsequently Mian Ashiq Hussain, Advocate submitted an application. dated 29‑10‑1999 for refund of Rs.45494627 which had been collected as regulatory duty on the import of plant and machinery of Thermal Power Station Muzaffargarh. The basis for claiming refund was that S.R.O. 279(1)/94, dated 2‑4‑1994 exempted the machinery and equipment from whole of customs duty if imported for setting up or balancing, modernization and extension of power generation. According to judgment of Hon'ble Supreme Court of Pakistan reported in 1999 SCMR 412, it was held as under:‑‑ "The exemption notification while exempting the goods from the existing charge of customs duty, may, however, also provide that any future levy of customs duty will also be exempted on the goods exempted from the current and existing charge of customs duty. Therefore, the conclusion that the exemption notification not only applied to the existing charge of customs duty but also covered the future levy of the customs duty will depend on the language used in the notification. It is, therefore, necessary to examine the language of various exemption notifications which were subject‑matter of consideration in the cases before the High Courts, lit order to determine whether the exemption granted by the Government from payment of customs duty applied to the existing charge of customs duty only, or it extended to the future levy of the additional customs duty as well though under a different name." It Was also stated in the said application, dated 29‑10‑1999 that the citizens money could not be withheld by public functionaries without lawful authority as held by the Hon'ble Supreme Court of Pakistan in the case .of Pfizer Laboratory PTCL 1998 CL

354. The application further stated that the regulatory duty in terms of S.R.O. 1050(1)/95, dated 29‑10‑1995 was not to be levied on items which were chargeable to duty at the rate of 65 % ad val. But despite that regulatory duty was collected on such items which were chargeable to 65 % customs duty. The Collector of Customs Multan issued a show‑cause notice to the appellants on 25‑2‑2000 proposing rejection of refund claimed on the ground that exemption available to regulatory duty vide S.R:O. 279(1)/94, dated 2-6‑1994 had been withdrawn vide S.R.O. 530(1)/94, dated 9‑6‑1994. The learned counsel appeared before the Adjudicating Officer and contested the show‑cause notice. However, the Adjudicating Officer relying upon the judgment of the Hoti'ble Supreme Court of Pakistan in C.Ps. Nos.1039‑L, 1040‑L, 1565‑L and 1709‑L of 1999 in the case of Zaman Paper and Board Mills and others rejected the refund claim of the appellants except for an amount of Rs.143131 (where customs duty at the rate of 65% had been charged). Hence this appeal.

2. During hearing the learned counsel, in addition to reiterating the points incorporated in his refund application, dated 29‑10‑1999, as briefly reproduced earlier, contended as under:‑‑ (a) Goods chargeable to duty @65 % ad valorem were not to suffer 10% regulatory duty in terms of clause (i)(c) and clause (ii) (b) of S.R.O. 1050(1)/95, dated 29‑10‑1995 "Chargeable" included both exemption and payable. Since the aforementioned clause of the S.R.O. envisaged exclusion of goods chargeable at the rate of 65 % customs duty from the purview of regulatory duty, question of actual payment did not arise". The Hon'ble Supreme Court of Pakistan vide its judgment, dated 20‑1‑1995 in C.Ps. Nos. 84‑K .to 86‑K of 1981 reported as 1992 SCMR 250, held "that the concept of exemption postulates chargeability under the charging provisions of statute". Similarly the Hon'ble Supreme Court of Pakistan vide its judgment, dated 12‑1‑1999 in C.Ps. Nos. 1089 to 1108 of 1995 and others, reported as 1999 SCMR 412 held "that if on the goods imported by any of the respondents the customs duty was held chargeable @ 65 % such goods were exempted under the notification, dated 29‑10‑1995 from payment of regulatory duty". The Hon'ble Supreme Court of Pakistan vide 'its judgment, dated 1.3‑6‑1990 in C.P. No. 285 of 1980 (reported as 1990 PTD 768 = PLD 1990 SC 1156 reproduced judgment of the Privy Council in the case of Whitney v. Inland Revenue. Commissioner (1926 AC 37) as under:‑‑ "My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable and the interpretation thereof by a Court should be to secure that object, unless crucial omission or clear direction makes that end unattainable. Now, there are three stages in the imposition of a tax, there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, exhypothesis has already been fixed. But assessment particularizes the exact sum which a person liable has ‑to pay: Lastly, come‑ the methods of recovery, if the person taxed does not voluntarily pay." (b) When the Government had exempted the goods from the charge of 65 % customs duty, that in law provided‑ sufficient ground to believe that it would also retrain exempt from 10% regulatory duty, as otherwise it would be a contradiction in' terms that higher rate of duty (65%) was exempt while‑ lesser of duty (10 %) was not exempt. (c) As held by the Hon'ble Supreme Court of Pakistan in its judgment, dated '19‑1‑1989 in Civil Appeals Nos. 180 to 191 and others (reported as 1996 SCMR 1470) ambiguity, if any, and in the presence of possible two interpretations, the same has to be interpreted in the favour of the subject. (d) The reliance placed by the Adjudicating Officer vide para. 5 of the impugned order was not relevant since no principle of law was settled and rather the Hon'ble Supreme Court simply refused leave to appeal and the issues of law were neither considered at that stage and nor any pronouncement was made by the Hon'ble Court in terms of Article 189 of the Constitution of the Islamic Republic of Pakistan. The principles of law settled by the Supreme Court of Pakistan were binding. He cited judgment of Hon'ble Supreme Court of Pakistan, dated 18‑2‑1997 in C.P. No. 419‑P of 1995 reported as 1997 SCMR 906.

3. The learned S.D.R. opposed the contentions of the learned counsel for the appellant on the following grounds:‑‑ (a) In terms‑of S.R.O. 1050(Ij/95, dated 29‑10‑1995 "goods charge‑able to statutory or concessionary rate other than zero per cent on the import into Pakistan shall be charged to regulatory duty @10%" excluding the items mentioned at sub‑clause (a‑defence imports), (b‑goods chargeable to duty @65% ad val.) and (c‑POL products mentioned therein). A plain reading of the said clause of S.R.O., dated 29‑10‑1995 made it clear that those goods which were chargeable (meaning thereby actual payment) to 65% duty were not to suffer to 10% regulatory duty. Since the goods imported by the appellant did not suffer 65 % duty, those were to suffer 10% regulatory duty. (b) There was not ambiguity/vagueness in the language of the S.R.O. dated 29‑10‑1995 and even a plain reading revealed the actual meaning and hence the situation ‑of adopting the interpretation favourable to the subject, out of two possible interpretations, did not arise. (c) The citations made by the learned counsel were not relevant to the case. The Adjudicating Officer had cited judgment of the Hon'ble Supreme Court of Pakistan in C.P. Nos. 1039‑L and 1040‑L and others (titled Zaman Paper and‑ Paper Board Mills) which is specific to the issue before the Tribunal and hence in terms of the said judgment the impugned order had been correctly passed. (d) The said situation also covered the items mentioned at clause (i)(c) of S.R.O. 1050(1)/95, dated 29‑10‑1995.

4. We have heard contentions of both the sides and perused the appeal file available before us. S.R.O. 279(1)/94, dated 2‑4‑1994 initially granted exemption from the whole of customs duty leviable under the 1st Schedule to the Customs Act, 1969 and regulatory duty leviable under section 18(2) of Customs Act, 1969 to machinery and equipment imported for power generation purposes. Subsequently vide S.R.O. 530(1)/94, dated 9‑6‑1994 exemption from regulatory duty was withdrawn. This meant that w.e.f 9‑6‑1994 exemption from regulatory duty was not available to the said machinery and equipment in terms of S.R.O. 279(1)/94, dated 2‑4‑1994. S.R.O. 1050(1)/95, dated 29‑10‑1995 levied regulatory duty to certain categories of goods under section 18(2) of the Customs Act, 1969 subject to certain conditions as mentioned therein. In terms of sub‑clause (ii)(b) goods chargeable to duty at the rate of 65 % ad val. were not to be subjected to regulatory duty. The Hon'ble Supreme Court of, Pakistan in its judgment reported in 1999 SCMR 412 discussed this issue of levy of regulatory duty in terms of the said S.R.O., dated 29‑10‑1995 and held that exemption notification issued under section 19 of Customs Act, 1969 prior to the issuance of the notification, dated 29‑10‑1995 would not automatically include exemption from regulatory duty as well and the wording of the notification would have to be examined in each case. The learned counsel has contended that the notification, dated 29‑10‑1995, under which regulatory duty was levied, exempted goods chargeable to duty at the rate of 65 % from the levy of regulatory duty. According to him, if the statutory rate of duty in the 1st Schedule to the Customs Act, 1969 indicated 65 % rate of duty then irrespective of the fact that the said duty was actually not paid on account of operation of some exemption notification, issued under section 19 of the Customs Act, 1969 such items could not be subjected to regulatory duty because the wording used in S.R.O. 1050(1)/95, dated 29‑10‑1995 was "chargeable" and not "payable" . This issue has itself been settled in the aforementioned judgment of Hon'ble Supreme Court of Pakistan reported in 1999 SCMR 412 by pointing out that customs duty levied under section 18(1) or regulatory duty levied under section 18(2) of Customs Act, 1969, as per the rates mentioned in the 1st /2nd Schedule to the Customs Act (in case of duty under section 18(1) ibid) and at the rates mentioned in the notification (in case of regulatory duty imposed under section 18(2) ibid) are to be read with sections 25/25B, 30 and 31A of Customs Act, 1969. For assessment of any imported goods, there has to be an assessable value in terms of sections 25/25B ibid, and there has to be a point of time in terms of section 30 ibid and that was when a bill of entry was filed in terms of section 79 and/or section 104 ibid and the effective rate of duty has to be in terms of section 31A ibid. All these provisions of law when read together mean that chargeability of duty in terms of section 18 of Customs Act, 1969 has to be read with the provisions of sections 25, 25B, 30, 31 and 31A ibid. This would mean that in case of exemption in terms of section 19 ibid of a duty levied under section 18 ibid, there would be no duty at the time specified under sections 30 and 31A ibid which would mean that on account of operation. of exemption notification to an item; the rate of duty chargeable would be "Nil". The rate of duty and value are then linked with the date of filing of bills of entry for its clearance and only that value and rate of duty would be applicable as was in force at the date/time envisaged under sections 25, 30 and 31 A of Customs Act, 1969. Resultantly, in the appellants' case where imported goods were exempted under section 19 of Customs Act, 1969, those were chargeable to `Nil' duty at the time of clearance and those were, therefore, correctly charged to regulatory duty' in terms of S.R.O. 1050(1)/95, dated 29‑10‑1995. All the case laws cited by the learned counsel pertained to cases relating to Wealth Tax Act, 1963, Income Tax Act, 1922 and Income Tax Ordinance, 1979. Therefore, facts, circum stances and laws involved in‑those cases are clearly distinguishable from the present case and hence not applicable to the appellants case.

5. The Adjudicating Officer correctly relied upon the judgment of the Hon'ble Supreme Court of Pakistan in C.P: No. 1039‑L, 1040‑L, 1565‑L and 1709‑L of 1999 of Messrs Zaman Paper and Board Mills and others v. Federation of Pakistan and others and the same is reproduced as under: "The contention of the learned counsel does not appear to be correct. What was explained in the above quoted paragraph in the case of Collector of Customs arid others v. Ravi Spinning Ltd. and others (supra) was that in respect of the goods which were already subjected to the payment of 65 % customs duties, the regulatory duty could not be recovered. It is not disputed by the learned counsel for the petitioners that the goods imported by his clients are not subject to payment of 65 % customs duties, although under the Schedule to the Act, the rate of duty in respect of the goods is 65 % . Since the petitioners have not paid the duty on the goods imported by them at the rate of 65 % ad valorum, they are not entitled to exemption from payment of regulatory duty in terms of the judgment of this Court in the case of Collector of Customs and others v. Ravi Spinning Ltd. and others (supra). No case of interference with judgment of High Court is made out. The petitions are, accordingly dismissed and leave is refused." The said judgment is applicable to the appellant's case and therefore, the Adjudicating Officer was justified in holding that where the appellants (then respondents) were not charged 65 % duty at the time of clearance, regulatory duty was correctly charged on those consignments under S.R.O. 1050(1)/95, dated 29‑10‑1995 and hence no refund was due to them. In view of the aforementioned detailed discussion we hold that e impugned order was correctly passed on law and facts and hence appeal is dismissed being devoid of any merits. C.M.A/331/Tax (Trib.) Appeal dismissed.