2002 PLP 130 (MLD)

1. M/s. Union Sport Cards Corporation, Plot No.10, Sector A‑4, K.E.P.Z., Landhi, Karachi.

2. M/s. Atlas Trading Corporation, (CHAL No.909), 3/4, Arkey Square, New Chal‑li,, Shahrah‑e‑Liaquat, Karachi.

3. M/s. Karachi Export Processing Zone Authority, Karachi. (Sd.) (MEHMOOD ALAM), Collector." The appellant replied the show‑cause‑notice stating that the restriction of 1600 CC engine capacity related to duty free import of a car for office use, further explaining that the said vehicle was imported for the purpose of transportation of staff and executives on which no restriction of engine capacity was prescribed. The respondent No. l kept quite for about .28 months and again issued ‑a notice on 1‑11‑1999 calling upon the appellant to appear before respondent No.l, on 11‑11‑1999. The respondent No. 1, ultimately heard the appellant and vide order dated 18‑1‑2000, directed for confiscation of the vehicle under Clauses (9) and (14) of section 146 of the Customs Act, 1969. The appellant being aggrieved preferred first appeal before the Customs, Excise and Sales Tax Appellate Tribunal. The appeal was dismissed on 19‑9‑2000. Being still dissatisfied, the appellant has preferred this second appeal before us. We have heard Mr. Abul Inam, learned counsel for the appellant and Mr. Raja Muhamamd Iqbal, learned counsel for the respondent No.

1. While dealing with the Question No. 1, above, Mr. Abul Inam, learned counsel for the appellant has submitted that in the Show‑cause notice, dated 17‑7‑1997 the respondent No.1, has stated that the exemption from payment of duty/taxes was available to such vehicles only, which had displacement up to 1600 CC, while the engine displacement of the vehicle was 2400 CC and, therefore, the vehicle was unlawfully cleared for KEPZ without payment of duty/taxes by the appellant. He has further drawn our attention to the order‑in‑original by the respondent No. 1, wherein the plea of appellant has been recorded to the effect that the restriction of 1600 CC engine capacity was applicable to the car for office use only and not to the vehicle imported for the staff transportation. He has further drawn our attention to the reply of respondent No.2, dated 22‑8‑1997, reproduced in the order of respondent No. 1, which reads as follows:‑‑ (i) EPZA is allowing to the industrial undertakings of KEPZ to import three types of duty free vehicles i.e. one vehicle for handling and transportation of the goods outside the limits of the Zone, one vehicle for transportation of labour and staff and one car for office use (not exceeding 1600 CC engine capacity) in accordance with the procedure laid down for expeditious clearance of the duty free vehicles at the time of importation notified by CBR vide CGO No. 1/83, dated 9‑1‑1983. (ii) We would like to clarify that restriction of 1600 CC engine capacity is confined to CARS. only as clearly mentioned in the above referred CGO. The restriction on engine capacity do not apply to the vehicles imported for transportation of Executive/labour for example van and buses and vehicle meant for transportation of goods like trucks, pick‑ups etc. (iii) The certificate of import issued to M/s. Union Sport Playing Cards Company for import of Toyota Land Cruiser clearly contain the purpose of transportation i.e., transportation of Executive/labour, Copy of COI is provided to Customs at the time of clearance by the importer. (iv) EPZA had issued certificate of import after observance of laid down criteria on the subject to M/s. Union Sport Playing Cards Company for importation of Toyota Land Cruiser Station Wagon. It may not be out of place to mention that EPZA in the past have issued the COls for the same vehicles to M/s. Pakore Garments in 1993. M/s. Millton Exports in 1996 etc, these vehicles were cleared try Customs. (v) It is evident from the position explained above that restriction of 1600 CC engine capacity do not apply to the vehicle imported by M/s. Union Sport Playing Cards Company for transportation of Executives/Labour. Hence the position taken by the Customs is not correct." He has further submitted that at the instance of respondent No. l the respondent No.2, while confirming that the customs authorities have been allowing import of duty free Toyota Land Cruiser, in earlier years changed its version which is reflected in the second reply addressed to respondent No. 1, which reads as follows: ‑‑ (i) Export Processing Zones Authority hereby confirms that the transportation of executives and labour should have not been clubbed together and here is definitely a categorization of vehicles used for transportation of labour/goods and that of Executives. (ii) The imported Toyota Land Cruiser (VX) 4 x 4 drive vehicle fully loaded falls in the luxury class vehicle. However, it is also a fact that these Land Cruisers in question were imported in 1993 and 1996 and the Customs Authorities have cleared them for the use under which EPZA had issued above noted certificate of import under the category of vehicle for transportation of labour. It is also a fact that the Customs Authorities after having cleared those vehicles at different period of years i.e. 1993 and 1996 did not raise any objection at that time till this has been pointed out just patently vide your letter referred to above. (iii) We may further apprise you of the fact that Export Processing Zones Authority having realising this fact that the vehicles which were imported under the category of vehicle for transportation of labour were not in conformity with the specified category under the CGO stopped forthwith issuing such kind of import certificate to the Investors who applied to avail such facility. Please kindly appreciate that the EPZA since then have decided to only allow the domestic vehicles to the Investors up to 1600 CC one in three years time. All such measures have been taken in order to avoid misuse of facility by the Investors of EPZA/KEPZ." On the basis of second reply of the respondent No.2, the respondent No.l, in his order dated 18‑1‑2000 observed that EPZA Authorities have accepted that 4 x 4 wheel vehicle do not fall under the category of vehicle importable for executives and may not be used for transportation of labour and it was not in conformity with the specified category under CGO 1 /83. The respondent No.1, further observed that the said vehicle was not covered under CGO 1/83 for use of the executive, as its engine capacity is 4164 CC and, therefore, the violations/offence stands established. The respondent No. l, further observed that there is no terrain inside or outside KEPZ where 4 x 4 vehicle are required or needed. He expressed opinion that import of vehicles is misleading and exemption of customs duty and other such taxes were incorrectly allowed. He subsequently confiscated the vehicle in favour of the Federal Government. Mr. Abut Inam, has submitted that the S. R.O. 881(1)/80, dated '23‑8‑1980 is general in terms and has allowed exemption from the whole of Customs duty and Sales Tax leviable on the goods imported into and exported from the Export Processing Zone. However, it is subject to such limitations and restrictions as Central Board of Revenue, impose from time to time. The C.B.R. issued two CGOs, in this behalf being No.l of 1983 dated 9‑1‑1983 and 22 of 1988, dated 26‑10‑1988. The CGO as amended on 26‑10‑1988 clearly envisage the duty free import of three categories. First, vehicle for handling and transportation of the goods out side the limits of Export Processing Zone, secondly duty free import of a car for office use not exceeding 1600 CC engine capacity and thirdly a vehicle for transportation of labour for each industrial undertaking. He has further submitted that a bare reading of the CGO 1/83 as amended by CGO 22/88, leaves no room for any doubt that three categories of vehicles have been allowed to be imported duty free and the respondent No. 1, has also accepted the proposition in his order. Mr. Abut Inam, has submitted that the respondent No. 1, misdirected in holding that the restriction of 1600 CC engine capacity was applicable to the third category of vehicle also and in doing so the respondent No. 1, had not assigned any reason except that the respondent No.2, has accepted that the said vehicle does not fall under the category of vehicle importable for executives and may not be used for the transportation of labour. The learned counsel has further submitted that the learned members of the Customs, Excise and Sales Tax Tribunal, also fell in error and incorrectly interpreted the provisions of CGO 1/83 as amended by CGO 22/88. "Mr. Abut Inam has drawn our attention to the plea which was taken before the Tribunal to the effect that the words "not exceeding 1600 CC engine capacity" were inserted in CGO 1/83 by CGO 22/88 after the words "import of a car for office use" and before the words "and a vehicle", for transportation of 4abour by each industrial undertakings. The Tribunal has recorded the contention of the appellant to the effect that the displacement up to 1600 CC engine would only cover the cars and not the vehicles but instead of giving any finding on this point and reading the CGO according to its plain language decided the issue on extraneous consideration. In support of his contention he has drawn our attention to para.8 of the impugned order. According to the learned members of the Tribunal the said vehicle cannot be said to be a vehicle for the purpose of transportation of officers and labour of an industrial unit. They further observed that for all intents and purposes, the vehicle in question can be said to be a luxury car and as such the exempt claim on the basis that it is a vehicle cannot sustain Mr. Abut Inam, has further contended that the learned members of the Tribunal have also placed reliance on the changed plea of respondent No.2, to the effect that a 4 x 4 wheel drive fully loaded vehicle falls in luxury class vehicle and, therefore, it can be categorised as a luxury car which was not entitled to any exemption. Mr. Abut Inam, has contended that, the question of exemption is required to be decided on the basis of plain language contained in CGO No.1/83 as amended by 22/88 and not on subjective consideration or presumptions to the effect that it can be used for any other purpose. He has submitted that if the department is in possession of any evidence that the vehicle has been misused and if such act constitutes any offence or empowers the concerned authorities to withdraw the exemption or levy any penalty the customs authorities may proceed in accordance with the law. However, merely on the basis of some apprehensions, subjective opinion and conjectures and surmises, the concession available in law cannot be denied. On the other hand Mr. Raja Muhammad Iqbal, learned counsel for the respondent No. 1, has supported the impugned findings of the respondent No. l and the Customs, Excise and Sales Tax Appellate Tribunal. He has contended that the said vehicle is not being used for the transportation of labour and consequently the exemption was not available to the appellant for importing the said vehicle duty free and the respondent No. 1, has rightly confiscated the vehicle on account of non- payment of customs duty. We asked Mr. Raja M. Iqbal, to show from the show‑cause‑notice if the respondent No. 1, received any such information and issued the notice on the basis of such information. Mr. Raja M. Iqbal, had no option but to concede that the show‑cause‑notice is completely silent on this point and that the sole reason for the issuance of show‑cause‑notice was the view that said vehicle did not qualify for exemption from duty/taxes in terms of S.R.O. 881, dated 23‑8‑1980 and CGO No. 1/83 as amended by CGO No.22/88. We have carefully considered the contentions raised by the learned Advocates for the parties, the material available on record, including the show‑cause‑notice and the impugned orders of respondent No. 1 and the Customs, Excise and Sales Tax Appellate Tribunal. We are persuaded to agree with the submissions of Mr. Abul Inam, that the correct principles of the interpretation of tax laws have not been adhered to by the respondent No. 1, as well as the learned members of the Customs, Excise and Sales Tax Appellate Tribunal. The established principle applicable to the taxing statutes/laws is that while applying and implementing fiscal legislation, if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the taxing authorities seeking to recover a tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appears to be the principle enunciated by Lord Rowlet in 1917, has been followed consistently by the superior Courts in England, Pakistan, India and Bangladesh, which is as follows:‑‑ "In construing a taxing statute one has to look merely at what is clearly said. There is no equity about a tax. There is no room for any intendment. There is no presumption as to a tax. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language used." Applying the above classical principle to the facts of this case and looking to the impugned orders of the learned two authorities below, we, find that in the CGO No. 1/83 as amended by CGO 22/88, the words used are that in pursuance of exemption from the payment of whole customs duty and sales tax granted on the goods imported into and exported from the E.P.Z. under S.R.O. 881(1)/80, dated 23‑8‑1980 and special permission granted to the industrial undertakings established in the Export Processing Zone for duty free import of vehicles for handling land transportation of the goods outside the limits of E.P.Z. and further the duty free import of a car for office use (not exceeding 1600 CC engine capacity) and a vehicle; for transport of labour by each. industrial undertaking contained in CBR U.O. No. 1980‑81 Cus. Exh.5(17), dated 11‑4‑1982, following procedure is prescribed for expeditious clearance of the vehicles at the time of importation. We find that three categories of vehicles are clearly envisaged, first, vehicle for handling and transportation of goods, secondly a car for office use not exceeding 1600 CC enging capacity and thirdly a vehicle for transportation of labour. The word "and" has been used in between one and the other category. It is established principle of the rule of interpretation that normally the word "and" is used in disjunctive sense until and unless shown to be e otherwise. Applying the two principles, first, that in respect of fiscal matters the Courts should look merely that what is clearly said and there is no room for any intendment of presumption and secondly that the word "and" is clearly used in disjunctive sense, we are of the considered view that the restriction of 1600 CC engine capacity is applicable to second category of vehicle i.e. a car for office use only and is not applicable to the import of a vehicle for transportation of labour. We are, of the opinion that the question at Serial No.4 is also covered by the discussion made above. We find that the respondent No.l, in its impugned order dated 18‑1‑2000 has heavily relied on the changed version of respondent No.2 and the learned Tribunal also appears to be impressed by the changed version of respondent No.2. The plea of exemption claimed by the appellant is to be examined on the touchstone of the S.R.O. 881, dated 23‑8‑1980 and CGO issued by the CBR and not on the basis of opinion/version held by the respondent No.2. We further find that the respondent No. 1, while holding that the said vehicle imported by the appellant does not enjoy exemption has considered the C facts which are not germane to the question of exemption available in law. The existence of any terrain inside or outside Export Processing Zone, is totally immaterial as no such fact can be considered to interpret the relevant CGO. We further find that the learned members of the CEST, Tribunal have considered a question whether it is a luxury vehicle or otherwise? All such considerations are extraneous and irrelevant for the purpose of deciding the question of availability of exemption to the appellant under the S.R.O. and the relevant CGO referred to above. For the foregoing reasons, our answer to Questions Nos. l and 4' reproduced above is that in C.G.O. No.l/83 as amended by 22/88, the restriction to the import of vehicle not exceeding 1600 CC engine capacity is applicable to second category of vehicle to wit import of car for office use only and is not applicable to third category which pertains to the import of vehicle for transportation of labour and there is no restriction/embargo on providing fully loaded luxury vehicle for the use of transporting its labour and executives. Now we come to the Question No.2, which deals with the period of limitation provided in section 32 of the Customs Act, 1969. The admitted facts are that the appellant filed the Bill of Entry on 23‑7‑1996 for the clearance and the clearance was allowed free of duty. The show cause‑notice stating that the duty/taxes were evaded and to explain as to why it should not be recovered was issued on 17‑7‑1997. The contention of Mr. Abul Inam, is that although the said vehicle was rightly imported free of duty/taxes, but if the respondent No.l, was of the view that the said vehicle was cleared free of duty due to any error inadvertence or misconstruction, respondent No.1, could issue the show‑cause‑notice within six months of the date of clearance and not beyond the said period. In this behalf he has placed reliance on subsection (3) of section 32 of the Customs Act, 1969. He has submitted that subsection (2) of section 32, under which action could be taken within three years in accordance with the law as prevailing in the year 1997, is not attracted. On the other hand, Mr. Raja M. Iqbal, learned counsel for the respondent No. 1, has submitted that neither subsection (2) nor subsection (3) is attracted. According to him it is a case of false declaration before the customs officials and consequently subsection (1) of section 32 is applicable in which no period of limitation is provided. In order to appreciate the contentions it would be appropriate to reproduce section 32 of the Customs Act, 1969, (as it stood before amendment inserted by Finance Ord: 2000), which is as follows:‑‑

32. Untrue statement, error. etc.‑‑(1) If any person, in connection with any matter of customs,‑‑ (a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or (b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer. [knowing or having reason to believe that such document or statement is false] in any material particular, he shall be guilty of an offence under this section. (2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice. (3) Where, by reason of any inadvertence, error or mis construction, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring him to show cause why he should not pay the amount specified in the notice. (4) The appropriate officer, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined. (5) For the purposes of this section, the expression "relevant date" mean:‑‑ (a) in any case where duty is not levied, the date on which an order for the clearance of goods is made; (b) in case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessment; (c) in a case where duty has been erroneously refunded, the date of its refund; (d) in any other case, the date of payment of duty or charge. As already discussed while deciding Questions Nos. l and 4, the appellant declared full and correct particulars of the vehicle imported and produced the Certificate of Import in which there is no mis‑statement, misdeclaration, concealment of facts or false declaration. The clearance was allowed by the customs officials with full knowledge of the make, design, capacity and other descriptions of the imported vehicle. Even in the Certificate dated 22‑7‑1996; furnished by the respondent No.2, to respondent No. 1, the full descriptions of the vehicle is given. So far the exemption claimed and allowed under CGO‑1/83 as amended by CGO 22/88, is concerned, the respondent No. l and all other customs officials were required to .know the contents of the CGO and there is no question of any concealment or misdeclaration or filing of any false certificate in this behalf. In the wake of availability of entire true facts on record and the clearance of the said vehicle free of duty/taxes with full knowledge of facts it can be termed at the most an inadvertent act, an error or mis‑construction in levy of the duty or charge. We, would like to clarify here that in fact there was no error or misconstruction in clearing the vehicle free of duty/taxes as held above. Here the discussion is only for the purpose of ascertaining the period of limitation and determining whether the show‑cause notice falls under subsection (3), subsection (2) or subsection (1) of section 32 of the Customs Act, 1969. The facts discussed elaborately clearly establish that neither there is any case of false statement or misdeclaration or filing of false certificate or' any other documents on the part of appellant nor the department has alleged any collusion by reason of any document or statement referred to R in subsection (1) of section 32 and consequently, the show‑cause notice could be issued by the respondent No. 1 under subsection (3) of section 32 of the Customs Act, within a period of six months from the relevant date which is defined in subsection (5)(a) of section 32, to be the date on which the order for clearance of the goods is made. The show‑cause notice has admittedly been issued after six months of the relevant date and consequently it was barred by time. We are, fortified in our views by an earlier judgment of this Court in the case of PIA v. CBR, 1990 CLC 868, in which his lordship Mr. Justice Saeeduzzaman Siddiqui, J, (as his lordship then was) held that when there is no allegation made by the Customs Department against the petitioner about any fraud, misrepresentation or false declaration at the time of obtaining of clearance without payment of customs duty or sales‑tax, it was a case of error or inadvertence on the part of customs authorities and, therefore, the show‑cause notice issued after expiry of period prescribed in section 32(3) of the Customs Act, was beyond time, void and of no legal effect and all orders passed subsequently in pursuance thereto were without lawful authority. Consequent to above discussion, it is held that in the facts and circumstance of the case, the show‑cause notice issued by the respondent No. 1, falls within subsection (3) of section 32 of the Customs Act, 1969. The notice has been admittedly issued after period of six months of the relevant date i.e. clearance of the said vehicle and as such F the show‑cause notice is barred by limitation. The said notice is held to' be void and all subsequent proceedings in pursuance thereto are also held) to be void, unlawful and without any legal authority. In view of our decision on the Questions Nos. 2 and 4, we are, of the opinion that the Question No.3, is not required to be answered and therefore, no finding is given on Question No.3. The appeal is allowed as above, and the Registrar is directed to send a copy of this judgment under the seal of the Court to the Customs, Excise and Sales Tax Appellate Tribunal. The Tribunal, shall pass orders to dispose of the case conformably to the decision of this Court. Q.M.H./M.A.K./U‑16/K Appeal allowed.