P L D 1976 Lahore 886 (PLP)

NASIM HASAN SHAH, J.‑This judgment will dispose of writ petitions, bearing numbers W. P. 2570 of 1975, W. P. 2571 of 1975, W. P. 2774 of 1975, W. P. 3089 of 1975 and W. P. 3090 of 1975, as the questions of law agitated in all these petitions are the same.

2. The petitioners are Importers of Iron and Steel Scrap for the purpose of re‑rolling. They held Import Licences under the Import Policy Order, 1974. On arrival of the goods in Pakistan, the importers presented bills of entry for clearance of their goods which was done in each case after 21‑8‑1975, as the goods arrived from abroad, in each case, after the said date. It is also an admitted position that the rate, and amount of duty applicable on the imported goods was leviable under the provisions of section 30 of the Customs Act, 1969 (IV of 1969), namely, upon the rate and amount chargeable on the date of delivery of the bill of entry to the appropriate officer. The appropriate officer, namely, the Superintendent (Imports) Customs (respondent No. 2), considering that the goods fell under the Pakistan Customs Tariff Heading 73'07 and as in each case the bill of entry was presented after 21st August 1975, held the goods leviable to duty @ Rs. 621 Y. in terms of S. R. O. 910 (1)/75 dated 21st August 1975, published in the Gazette of Pakistan (Part II/Statutory Notification), which is in the following terms "S. R. O. 910 (1)/75.‑In exercise of the powers conferred by sub section (2) of section 18 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to direct that regulatory duty shall be levied on, all items of iron and steel scrap for re‑rolling falling under the respective heads of Chapter 73 of the First Schedule to the said Act so as to increase the rate of duty to 621 ad valorem in case of items the rate of which is lower than the said rate." In all these writ petitions the legality and validity of the above Notification is challenged.

3. The question arises in the following way‑By section 7 of the Finance Act of 1975 (Act L of 1975), an amendment, inter alia, was made in the Customs Act, 1969, namely, for the existing section 18 the following was substituted "18‑(1) 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) . (c) . (2) The Federal Government may, by notification in the official Gazette, levy, subject to such conditions, limitations or restrictions as it may deem fit to 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, read with any notification issued under subsection (1) of section 2 or subsection (1) of section 3 of the Protective Duties Act, 1950 (LXI of 1950) 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,‑ (3) The regulatory duty levied under subsection (2) shall be in addition to any duty imposed under subsection (1) or under any other law for the time being in force. (4) Any notification issued under subsection (2) shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued."

4. The First Schedule, reference to which is made in section 18, reproduced above, prescribes the Import Tariff and Chapter 73 thereof deals with "Iron and Steel and Articles thereof". According to the petitioners the articles imported by them fall under Heading 73.03 of the Pakistan Customs Tariff which heads "Waste and scrap metal of iron or steel" and the rate of duty prescribed thereon is 32J % ad valorem, while according to respondent No. 2 the articles imported by the petitioners fall under the Heading No. 73.07, namely, "blooms billets, slabs and sheet bars (including tinplate bars), of iron or steel, pieces roughly shaped by forging, of iron or steel", on which the rate of duty chargeable is 37 % ad valorem. Since, however, both these articles fall under Chapter 73 of the First Sche dule, the duty chargeable thereon by virtue of Notification bearing No. S. R. O. 910 (II/75, dated 21st August 1975, issued under subsection (2) of section 18 of the Customs Act, levying regulatory duty on all items of iron and steel scrap for re‑rolling falling under the respective heads of Chapter 73 of the First Schedule to the said Act, stands enhanced to the rate of 621 % ad valorem in case of items the rate of which is lower than the said rate. In consequence the exact Head under which the imported articles fall is not material, nor has any argument been addressed thereon, and it is only the levy of the regulatory duty whereby the rate of duty has been increased to 621 % ad valorem which has been challenged before us.

5. Two questions in the main have been agitated during the course of arguments before us. In the first instance, it was submitted that the Federal Legislature, according to Item No. 43, Fourth Schedule, attached to the Constitution of the Islamic Republic of Pakistan, 1973, is empowered to enact laws for levying "duties of customs, including export duties". Regulatory duty does not fall within the ambit of duties of customs and, accordingly, the provision of subsection (2) of section 18 of the Customs Act as substituted by the Finance Act of 1975, authorising the levy of regulatory duty, are ultra vires. So far as the notification of 21st August 1975, imposing the regulatory duty is concerned, it is submitted that having levied customs duty through subsection (1) of section 18, the power to levy customs duty was exhausted and the Federal Legislature was not competent either to impose a further charge itself or to authorise the imposition of an additional charge by an external agent, such as the Federal Government. The second major contention raised was that in any event, as no guidelines were given by the Federal Legislature to the Federal Government upon which the regulatory duty could be imposed, there was on its part a total surrender and abdication of legislative functions. In other words, the impugned levy was bad on account of excessive legislation.

6. In support of the first contention, Mr. Mumtaz Hussain, learned Advocate for the petitioners, submitted that the expression "duties of customs" used in Item No. 43 of the Fourth Schedule to the Constitution was equivalent to the expression "Customs-duties" mentioned in subsection (1) of section 18 of the Customs Act. In this connection he pointed out that the term "tariff duty" and customs were used interchangeably and in support thereof referred to Encyclopaedia Britanica (1973 Edition). Thus, according to him the levy of Customs-duties under section 18 (1) of the Customs Act was referable to Item No. 43 of the Fourth Schedule to the Constitution, which authorised the levy of "duties of customs". However, no provision existed in the Fourth Schedule authorising the levy of "regulatory duty". He further argued that the regulatory duty did not partake of the nature of "Customs-Duties" because the meaning of the word "regulate" was to control, limit, restrain, or adjust. Regulatory duty was, therefore, not a duty in the nature of customs duty, but something apart and distinct therefrom. In brief the argument was that "regulatory duty" was not comprehended within the expression "Duties of Customs" or within any other entry either in the Federal or the concurrent list. Consequently, the provisions of subsection (2) of section 18 of the Customs Act, authorising the levy of "regulatory duty" by notification in the official Gazette were, ultra vires of the provisions of Item No. 43 of the Fourth Schedule to the Constitution.

7. It was further submitted that the examination of the provisions of subsection (2) of section 18 of the Customs Act showed that "regulatory duty" is distinct from the charge under subsection (1) of section 18 of the Customs Act and once customs duty having been levied through subsection (1) of section 18, the power to levy the said duty stood exhausted. On that ground also, the levy of a further duty by issuance of a notification under subsection (2) of section 18 was not valid.

8. There is not much force in these submissions. The entry of Item No. 43 of Part I of the Fourth Schedule to the Constitution reads as follows "

43. Duties of customs, including export duties." Two other entries in the same part of the Fourth Schedule are also relevant in this context, namely, Items Nos. 27 and

59. Items No. 27 to the extent relevant, is in the following terms "

27. Import and export across customs frontiers as defined by the Federal Government . . . . . ." and Item No. 59 provides as follows "

59. Matters incidental orancillary to any matter enumerated in this Part The Federal Legislature can legislate with reference to the subject-matter of the above-entries. Thus legislation can be enacted in connection with all matters pertaining to customs.

9. The nature of "customs" is explained in the Encyclopaedia International, by Grolier (1970 Edition), as follows "Customs, general term for duties, charges, or imposts levied on imported or exported goods, in contradistinction to internal taxes, such as excise duties or sales taxes. In the absence of treaty provisions to the contrary, every sovereign state is free under international law to regulate its customs in any manner which may best serve its interests. There are certain basic objectives in the regulation of customs, and the emphasis is on one or the other accounts for the varying policies of different states on the matter. First, it is a source of revenue ; second, an import tax may serve as a means of protecting the goods of home industries against foreign competition ; finally, ii may be employed to obtain some specific privileges , commercial or otherwise, from other countries. The terms "customs" and "tariff's" are interchangeable, though the latter also denotes the schedule of commodities and the corresponding rates of duties."

10. According to the learned Attorney. General the "regulatory duty" is in essence also a customs-duty. The necessity for imposing it was explained to be that there had been a sharp fall in the international prices of iron and steel scrap and certain other iron and steel items with the result that importers were now importing these materials at much lower cost. Nevertheless, prices in the domestic market, did not come down to any substantial extent and it was only the importers who were deriving the benefit of the sharp fall of prices in the International market and were getting windfall profits. It was, therefore, decided to equip the Government with a regulatory device in the form of a power to enhance, by notification, the rate of duty at any time during the course of the year, specifying however, the maximum limit to which the Government could do so, but at the same time providing that the notification would automatically lapse at the close of the financial year. The levy was described as a regulatory duty, because it was to be imposed to maintain a proper balance, in a fluctuating market, and was otherwise nothing else but a "Customs Duty", but to deal with special situations and to remain in force for a limited time. It could be levied on import as well as on export. Section 18 of the Customs Act, which was the charging section, provided for the imposition of customs, duty on any article. Accordingly, the duty referred to in the notification of 21st August 1975, being also a duty of customs, could have been levied and subsection (2) of section 18 of the Customs Act, authorising its levy was not ultra vires of the Constitution.

11. There is force in this submission. As held by the Privy Council in Governor-General-in-Council v. Province of Madras (AIR1945PC98) "it is not the name of the tax but its real nature its "pith and substance" as it has sometimes been said which must determine into what category it falls." Thus' ft is the real nature of the charge, which must be ascertained by considering all the attendant circumstances and not its nomenclature which is the crucial factor. The real nature, the "pith and substance" of the duty levied by, the notification and issued under section 18 (2) is that it also is a customs duty which is levied in addition to the Customs duty levied under subsection (1) of section

18. This position is fully clarified by a reference to the provisions of subsection (3) of section

18. The levy being simply ins the nature of a duty of customs, subsection (2) of section 18 of the Customs Act, which authorizes the said levy, is clearly intra vires the Constitution, as this levy is relateable to Item No. 43 read with Items Nos. 27 and 59 off the Fourth Schedule to the Constitution. '

12. Similarly there is no force in the further submission that once the rate of duty has been imposed as per terms of Schedule I to the Customs Act, with respect to the various items specified therein, the power to levy the duty stands exhausted and, therefore, no further duty could be levied under subsection (2) of section

18. Section 18 of the Customs Act is the charging section and the various subsections of it have to be given effect to and according to the provisions of section 18 (1), the rates of duty on the various items, subject to the charge of customs duty are, in the first ins tance, sacrified in the First and Second Schedules, but the Legislature has provided for the levy of a further customs duty if the Federal Government considers its imposition in the circumstances of any case to be necessary‑. called a "regulatory duty"‑under subsection (2) of section 18 of the Customs Act. In so far as subsection (2) of section 18 is not ultra vires the Constitution, the power conferred upon the Federal Government thereunder can, there fore, be legitimately exercised. If the argument advanced on behalf of the learned counsel for the petitioners was to be accepted, it would render nugatory the provisions of the said subsection, which is not possible o any interpretation of the law. In fact, the provisions of subsection (2 of section 18 deal with certain special situations and the levy of customs duty at the rates prescribed in the First Schedule, referred to in sub section (1) of section 18 does not debar the additional customs duty, described as "regulatory duty" to be levied under subsection (2). In other words, the levy of customs duty under subsection (1) of section 18 does not exhaust the power to levy the "regulatory duty" aforementioned, as contended for on behalf of the petitioners.

13. The last submission of Mr. Mumtaz Hussain, learned counsel for the petitioners, that without prejudice to his earlier contentions, the power conferred by subsection (2) of section 18 of the Customs Act to the Federal Government to levy the "regulatory duty" is a total surrender of legislative functions, without prescription of any guidelines or principles for its exercise may now be taken up. The submission is that the purpose and object for imposition of the "regulatory duty" is not specified in subsection (2) of section

18. Moreover, the purpose and object for which the levy can be imposed must be ascertainable from the enactment itself and not from any explanations that may be given allunde. No guide lines are furnished as to when and how the power is to be exercised by the federal Government, in the provision in question, except for indicating the ceiling of the rates that can be imposed. The following observations of Hamoodur Rehman, J. (as he then was) in Province of East Pakistan v. Sirajul Hoq Patwari (P L D 1966 S C 854) at page 952 were referred to in explanation of the principle being canvassed for t "I do not wish, however, to dispute that the Legislature cannot abdicate altogether from its legislative functions or totally efface itself but where the Legislature has sufficiently expressed its will and exercised its judgment as to the territorial extent, scope and subject‑matter of the legislation, the provision of details, particularly when such details are by their very nature incapable of being laid down by the Legislature itself, can well be left to be done by another agency in whom the Legislature places confidence." Elaborating his submission on this point, Mr. Mumtaz Hussain, Advocate, further submitted that subsection (2) of section 18 does not throw any light on what is to be regulated. He argued that "regulation" cannot be used in isolation and that this power is conferred to regulate something. However, the perusal of the provisions in question did not show what was to be regulated, for which power to impose the duty had been conferred.

14. The learned Attorney‑General, in reply, referred to some other pa‑,‑ ages in the same judgment, one of which appears on the same page of the report, which reads as follows "Be that as it may, this much, however, is certain that other systems have never accepted the doctrine of the separation of powers in the rigid form in which it has prevailed in the United States, namely, that the several departments of Government are r of merely equal but also exclusive and one department cannot interfere with or encroach on either of the other departments notwithstanding that the Constitution does not expressly so prohibit. Under the English system and our, own system, which has substantially adopted the English pattern, there is no such exclusiveness. The intermingling of functions is not an uncommon feature of our system of Govern ment " He also referred to certain passages, in the same case, occurring in the judgment of Muhammad Yaqub Ali, J. (now Chief Justice), at page 967 "In Fahey v. Mallonee the Congress bad delegated power to provide through regulations) for the liquidation of savings and loan associa tions and to appoint conservation receivers to take charge of the associations. Congress had stated no standard, no policy, no intelligible principle with respect to liquidation or as to appointment of conservation receivers. It was held "It may be that explicit standards . . . . . would have been a desirable assurance of responsible administration. But the provisions are not penal provisions . . . . . The provisions are regulatory and the Board's Regulations are sufficiently explicit against the background of custom to be adequate for proper administration and for judicial review if there should be a proper occasion for it." However, great emphasis was placed on the judgment of a Full Bench of the Sind & Baluchistan High Court in the case of Zaibtun Textile Mills Ltd. v. Central Board of Revenue(P L D 1971 Kar. 333), wherein the question of unconstitu tionality on the ground of impermissible delegation of legislative powers has been discussed at great length. The question there was whether there had been impermissible delegation of legislative functions by the Legislature when it delegated to the Central Board of Revenue the functions to impose tax according to the production capacity of an industrial unit and whether the Legislature in doing so effaced itself 8r abdicated from its essential legislative functions, On the question of delegation of legislative powers to impose rates and taxes, reference was made to a decision of the Supreme Court of Minnesota in Minnesota Ex Rel. Railroad and Warehouse Commission v. Chicago, Milwaukee and St. Paul Railway Co. (38 Minn. 28=137 N W 782), wherein the Court stated the principle as fellows "The power of taxation is legislative, but this does not require the Legislature itself to assess the value of each man's property, or determine his share of the tax. The exercise of the police power in requiring persons who follow certain occupations to obtain a licence is legislative ; but nothing is more common than to delegate to certain officers or boards the power to ascertain and to determine whether persons have the proper qualifications as to learning, skill, or moral character, and to grant or refuse a licence according as they find the facts to be. The difference between the power to say what the law shall be, and the power to adopt rules and regula tions, or to investigate and determine the facts, in order to carry into effect a law already passed, is apparent. The true distinction is between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and the conferring of an authority or discretion to be exercised under and in pursuance of the law." Further on, the Court observed "For a popular Legislature that meets only once in two years, and then only for 60 days, to attempt to fix rates, would result only in the most ill‑advised and haphazard action, productive of the greatest inconveniences and injustice alike to the railways and the public. If such a power is to be exercised at all. it can only be satisfactorily done by a board or commission, constantly in session, whose time is exclusively given to the subject, and who, after investigation of the facts. can fix rates with reference to the peculiar circumstances of each road, and each particular kind of business, and who can change or modify these rates to suit the ever‑varying conditions of traffic," At another place, the Court stated thus "Our Legislature has gone a step further than most others, and vested our commission with full power to determine what rates are equal and reasonable in each particular case. Whether this was wise or not is not for us to say ; but in doing so we cannot see that they have transcended their constitutional authority. They have not delegated to the Commission any authority or discretion as to what the law shall be which would not be allowable‑but have merely conferred upon it an authority and discretion, to be exercised in the execution of the law, and under‑ and in pursuance of it, which is entirely permissible. The Legislature itself has pressed upon the expediency of the law, and what it shall be." He also relied upon the recent judgment of the Supreme Court, reported as Mehreen Zaibun Nisa v. Land Commissioner (P L D 1975 S C 397) wherein their Lordships, after referring to the case of Province of East Pukiston v. Strajul Haq Patwari (P L D 1966 S C 854) observed : ' . . one of the cardinal principles of interpretation is that law should be saved rather than destroyed, and the Courts should lean in favour of upholding the constitutionality of a legislation. The power to strike down a law as unconstitutional must be exercised only when absolutely necessary."

15. Questions pertaining to the scope of delegation of legislative powers by the Legislature to executive authorities has been engaging the attention of our Courts ever since Independence. The first important decision in this connection is to be found in the judgment of the Federal Court in Sobho Gyanchandani v. Crown (P L D 1952 F C 29), wherein it was held that vesting in the Central Government the power to attend the life of an Ordinance confers legislative powers on an external authority and, therefore, the above delegation of legislative powers was valid. In this judgment. however, the following observations of Mr. A. S. M. Akram, J. are relevant in the context of the present case and may be reproduced hereunder with advantage: "I think it cannot be denied that a substantial delegation of powers becomes necessary in the evergrowing complexities of a modern State, but the question arises what should be the limits of such a delegation. In my opinion, matters of a fundamental nature or of general policy or of great importance, cannot be delegated, though powers may be assigned within reasonable limits and scope, such as, the determination of time, place, persons, dutiable commodities etc., so that rules, regulations, schemes and bye‑laws may be made by anyone empowered to do so, within the framework of the main legislation . . . . . . : ' (Underlining* is mine) In District Magistrate, Lahore v. Raza Kazim (P L D 1961 S C 178) it was contended that in so far as section 17 of the Arms Act (XI of 1878) purported to give to the Central Government the power to make any rules for laying down the terms and conditions on, and subject to. which licences may be granted without indicating anything more or laying down any criterion for the guidance of the rule‑making authority or defining any general policy for the grant or refusal of such licences, it amounts to giving to the executive authority the power of itself legislating and this could not be done. This argument was repelled and it was held that on examining the language of the Indian Councils Act, 1861, and comparing the legislative powers of the Governor‑General‑in‑Council under the said Act with the provisions of the Arms Act, one finds that in enacting section 17 of the latter Act that legislative authority could, in no sense of the term, be said to have abdicated or effaced itself or created a new legislative body or legislated beyond its competence. Having regard to the nature of the object sought to be achieved by the legislation (Arms Act) it was impossible for the Legislature to attempt to provide for every detail and machinery to carry it into effect, hence the Legislature, whilst retaining its legislative powers intact and maintaining its full legislative control authorised the executive merely to determine the manner of carrying it into effect by rules framed in that behalf. Reliance was also placed on the case reported as East and West Steamship Company v. Pakistan (P L D 1958 S C (Pak.) 41), wherein it was observed that "an exception has always been recognised in the case of situations which require the vesting of discretion in public boards or officials where it is difficult or impracticable to lay down a definite comprehensive rule, or the discretion relates to the administration of licensing requirements to protect the general welfare."

16. In this case the reasons for imposing the regulatory duty have been noted in paragraph No. 10 above. These were in fact given in the Budget Speech of the Finance Minister, while presenting the Budget for the year 1975‑76 and the background is to be gathered from the Budget speech delivered by Mr. Muhammad Shoaib in the year 1964, when he was Finance Minister, and a provision of this kind was introduced for the first time. The objection, however, is that the reasons should be decipherable from the enactment itself and that the speeches made in the Legislature, explaining the objectives of a proposed legislation are not admissible. This objection cannot be accepted, because authority exists to the effect that the D Courts can refer to debates of the Members of the Legislature where such debates are available, when the law is being enacted (See Federation of Pakistan v. Moulvi Tamizu Nrn Khan (P L D 1955 F C 240) and A. K. M. Fazlul Quader Chowdhury v. Government of Pakistan (P L D 1957 Dacca 342). Thus the objection raised on the point that no guidelines are available for the Federal Government to indicate the circumstances in which it may issue a notification to levy regulatory duty is answered by reference to the above speeches. Even otherwise the reference to the provisions of section 18 is sufficient to repel the contention of Mr. Mumtaz Hussain, the learned counsel for the petitioners. The articles on which the regulatory duty may be levied have been specified in the various clauses of subsection (2), the maximum rate on which the duty can be imposed for the different categories, has also been specified. The duty, moreover, can only be for a specified period (subsection (4) of section 18). Thus sufficient indication is provided by the law, to the executive authority within the limits of which it may exercise the power of levying the regulatory duty. The Legislature has sufficiently expressed its will and as the fluctuations F in the world market require speedy action, which can be more easily taken cognizance of by the Federal Government, charged with the operation of the licensing system in question, the objection that there has been an imper missible delegation of legislative functions is not correct. Moreover, the discretion vested in the Federal Government has been circumspectly exercised, is shown by the fact that out of hundred of items on which the duty could be levied, only the items falling under Chapter 73 have been selected for levy of the additional customs or regulatory duty. Thus, neither has ,there been any abdication or surrender of the legislative power nor has disecetion conferred on the executive authority been exercised arbitrarily. There is no force in the contentions raised on behalf of the petitioners.

17. No other point was pressed before us.

18. The; ever‑all result is that these writ petitions must fail and are hereby dismissed, but in view of the intricate questions of law involved therein, there shall be no order as to costs. s. A. H. Petition dismissed. (1) P L D 1955 F C 240 (2) P L D 1957 Dacca 342