1990 PLP 865 (CLC)

Yousuf Re‑rolling Mills and others v. Collector. of Customs P L D 1989 SC 232 rel. Mohsin Tayab for Petitioner. Adil Khatri for Respondents. Date of hearing: 16th May, 1989. SAEEDUZZAMAN SIDDIQUI, J.‑‑The petitioner in the above case imported approximately 3,879 metric tons of Sodium Hydero Oxide Caustic Soda which arrived at Karachi Port on or about 31‑10‑1982. The petitioner filed bill of entry for clearance of the consignment for home consumption on 3‑11‑1982 and claimed that the custom duty is payable at the rate of 40% ad valorem as prescribed under the Schedule. The Customs authorities, however, took the view that in view of a telex message received by the Collector of Customs from Central Board of Revenue on Ist Nov. 1982, regulatory duty at the rate of 45% ad valorem has been levied with effect from 31‑10‑1982 on the above item, and, accordingly; they demanded payment of additional 45% regulatory duty from the petitioner at the time of clearance of the consignment. It is an admitted position that the consignment was ordered to be released by this Court on 17‑11‑1982 upon payment of 40% prescribed customs duty under the schedule and upon furnishing of a bank guarantee for the additional regulatory duty demanded at the rate of 45% ad valorem, to the satisfaction of the Collector of Customs. It is also an admitted position that upon furnishing of the required Bank guarantee by the petitioner the consignment was released in favour of the petitioner. Learned counsel for the petitioner has advanced two ‑fold contentions in support of the petition. It is, firstly, contended that no regulatory duty could be imposed under section 18 (2) of the Customs Act without issuing a notification in the official Gazette as required under the Act. And secondly, the imposition of regulatory duty in excess of 50% of the duty prescribed under the Schedule was void. It is specifically alleged in the petition that no notification under section 18 (2) of the Customs Act imposing regulatory duty on the import of caustic soda has been issued by the Federal Government. No counter‑affidavit has been filed and the learned counsel for the Department is unable to produce the required notification under section 18 (2) of the Customs Act. In so far the contention of the learned counsel for the petitioner that the imposition of regulatory duty at the rate of 45% ad valorem was illegal as it was in excess of 50% of the duty prescribed on caustic soda under the schedule to Customs Act, is concerned, the same is fully supported by a recent decision of Supreme Court in the case of Yousuf Re‑rolling Mills and others v. Collector of Customs (P L D 1989 S C 232). The relevant observations of the Court appear at pages 240 and 241 of the report as follows; "A reference to the First Schedule of the Customs Act makes it clear that customs duty is not levied on all the articles mentioned therein on a uniform basis. The duty levied is on four different basis. The first group comprises articles in respect of which no customs duty is leviable such as coal under item No.27.01 of Chapter

27. The second group comprises articles which are the subject‑matter of these appeals in respect of which the rates of duty are prescribed as certain per cent on the valuation of the articles imported and described as ad valorem. The third group comprises those articles on which the levy of customs duty is per unit basis that is as per gaoon, per pound, per foot or per piece. In such a group fall items such as cinematograph film under the heading 37.02 of Chapter 37 in regard to which the levy is 5 paisaso per linear per foot. The fourth group comprises articles on which customs duty in not only payable on per unit basis but in addition to it there is also an ad valorem charge. In this category fall articles such as beer made from malt under item No.22.03 of Chapter

22. The customs duty payable in respect of it is Rs. 7.5 per cent per liquid gaoon plus 25 per cent ad valorem charge. While enacting subsection (2) of section 18 of the Customs Act, the legislature was presumed to know the state of affairs in regard to the articles falling in these categories, and, therefore, it gave discretion to the Federal Government by enacting the two alternatives to suit the situation, and while in the first part it restricted the levy at a rate not exceeding fifty per cent of the rate, if any, specified in the First Schedule and in the second, it allowed the rate not to exceed hundred per cent of the value of such articles as determined under section

25. The distinction is accordingly maintained in the two parts by reference to the maximum regulatory duty leviable on the basis of the rates specified in the Schedule and the value of articles as determined under section

25. Each part of subsection (2) therefore, has restricted application. If the rate of duty of the articles is specified in the First Schedule then no discretion is left to the Federal Government to exceed the limit prescribed namely fifty per cent. But if no rate is prescribed in the First Schedule such as in the case of these articles which are imported free of customs duty, it is only then that the maximum of the second part can be levied on the value of the articles determined under section

25. The restriction to levy regulatory duty is accordingly explicit in case the articles imported fall under the first part in regard to which the rate of duty is prescribed in the First Schedule and while imposing the levy of regulatory duty the Federal Government is under this restraint. It has no discretion to levy the maximum of the second part as that part was intended to apply to articles in respect of which no rate was prescribed and it was therefore on the valuation of the articles that the maximum hundred per cent was intended to apply as it was the only duty payable". Learned counsel for the department is unable to dispute the above legal position and we, accordingly, hold that in the absence of a notification under section 18 (2) of the Customs Act, issued by the Federal Government in accordance with the provisions of section 18 of the Customs Act no regulatory duty could be imposed and in any case the imposition of regulatory duty in excess of 50% of the prescribed rate of the customs duty on the caustic soda under the A Schedule was wholly without jurisdiction. We accordingly, allow the petition and declare the demand of regulatory duty by Customs Authorities in excess of 50% of the prescribed rate of duty on caustic soda under the Schedule to the Customs Act in the absence of a notification under section 18 (2) of the Customs Act, as without lawful authority and of no legal effect. The case is, however, remitted back to respondent No.1, to determine first the actual regulatory duty on the goods in the light of above observations, if on the date of clearance of goods a valid notification imposing regulatory duty on caustic soda was issued by the Federal Government under section 18 (2) of the Customs Act. There will be no order as to costs. M.Y.H/C‑132/K Case remanded.