1984 PLP 490 (CLC)

(a) Customs Act (IV of 1969)‑ ‑‑ S. 81‑Provisional assessment of duty.‑Notices to pay short -levied amounts can be issued only in case of provisional assessment made under circumstances specified in S. 81‑Rate and amount mentioned in bills of entry accepted by Customs authorities and goods cleared on payment of duty‑Held, assessment was not "provisional assessment" to attract S. 81. (b) Customs Act (1V of 1969)‑ ‑‑‑ Ss. 32 (2) & (5) & 202 ‑‑‑ Provisional Constitution Order (1 of 1981), Art. 9‑Final assessment of duty‑Duty short‑levied by reason of false documents or statement‑Notice for payment of such short‑levied duty within prescribed period not given‑Held, duty not recoverable under S. 32 if show‑cause notice not given within prescribed time‑Demands for short‑levied duty and recovery proceedings, having become barred by time, held further, were without lawful authority. JUDGMENT NASIR ASLAM ZAHID, J.‑This judgment will dispose of Constitutional Petitions Nos. D‑491, D‑492, D‑493 and D‑494 of 1.982. Petitioner as well as the respondents are the same in all the four petitions.

1. The petitioner had established four letters of credit in favour of Singapore companies for the import of timber, hardwood and wood squares during the year 1975, 1976 and 1977. Shipments were made by the foreign exporters and the goods arrived at Karachi. The petitioner filed bills of entry in respect of the consignments. The goods imported by the petitioner were cleared by the Customs on payment of import duty by the petitioner. It may be observed here that in all the four cases the Customs Authorities did not challenge the rate and amount of duty entered by the petitioner in the respective bills of entry filed by them. In February, 1982 copies of the letters of the Assistant Collector of Customs (Recovery Cell) addressed to the Dy. Commissioner, South, Karachi, were received by the petitioner, in which letters it was stated that on scrutiny certain amounts on account of custom duty and sales tax were found to have been short‑levied in respect of the consignments in question imported by the petitioner and although demands for the amounts short levied were issued but the deficit amounts had not been paid by the petitioner and in the circumstances the Deputy Commissioner was requested to recover the dues of the customs as arrears of land revenue under section 202 (2) of Customs Act, 1969. According to the petitioner, prior to initiating action for recovery of amounts, no notice had been issued by the Customs Authorities upon the petitioner. On the other hand, Customs Authorities had taken a stand that in November, 1981 notices were issued showing final assessments under section 81 of the Customs Act and requiring the petitioner to pay the short‑levied amounts. Receipt of these notices, however, has been denied by the petitioner. The demand and action for recovery by the Customs Authorities has been challenged in the four petitions before us. We have heard Mr. S. Tariq A. Hussain, learned counsel for the petitioner and Mr. S. Inayat Ali, Advocate, who has appear ed on behalf of the respondents.

2. The case of the petitioner is that section 81 of the Customs Act, 19.69 is not applicable in the instant cases, as these were not cases of pro visional assessment. A reference to section 81 shows that where it is not possible to assess the custom duty immediately on any imported goods for the reason that the goods require chemical or other test or a further enquiry or that all the documents or incomplete documents or full information pertaining to the goods in question have not been furnished, an officer not below the rank of Assistant Collector of Customs can order that the duty payable on such goods be assessed provisionally. In such cases the im porter is required to pay such provisional amount as security or to furnish such bank guarantee as the officer concerned deems sufficient to meet the excess of the final assessment of duty over the provisional assessment. A perusal of the bills of entry in these cases shows, as observed earlier, that the rate and amount of duty entered in the bills of entry filed by the peti tioner were accepted by the Customs Authorities and the goods were cleared on payment of such duty. Documents do not show that these were cases of provisional assessment. Mr. S. Inayat Ali, learned counsel for the respon dents, very frankly conceded that the documents apparently show that these were cases of provisional assessment. In cases of final assessment also there is a power vested with the Customs Authorities under section 32 of the Customs Act, 1969, to take action for recovery of any duty which has been short‑levied. Under sub section (2) of section 32, however, if any person signs or delivers any dec laration or other document knowing or having reason to believe that such document or statement is false in any material particular and by reason of such document or statement any duty has been short‑levied, the amount can be recovered from such person provided a show‑cause notice is given to him within three years of the relevant date, Subsection (5) of section 32 of the Customs Act, 1969, defines "relevant date" and for the purposes of the present cases the relevant date means the date of payment of duty. It is an admitted position that prior to November, 1981, no notice had been given to the petitioner under section 32 and in the circumstances, the demand for short levy had become time‑barred, as the duty in the four cases had been paid much before the year, 1978. We have come to the conclusion that the assessment made in these cases at the time when the bills of entry were filed by the petitioner were not provisional assessments and as such section 81 of the Customs Act, 1969, was inapplicable. Action under section 32 for the recovery of the amounts in question could also not be taken, as more than three years had passed from the dates of payment of the import duties by the petitioner before any notice was given by the Customs Authorities.

3. As a result, Constitution Petitions Nos. D‑491, D‑492, D‑493 and, D‑494 of 1982 are allowed and it is declared that the demands made by the[ Customs Authorities and the action taken for the recovery of the same in all the four petition, are without lawful authority and of no legal effect. The amounts deposited by the petitioner in this Court in these petitions may be refunded to the petitioner. There will he no order as to costs, as the learned counsel does not press for costs. M. A. K. Petitions allowed.