2006 PLP (Trib (PTD)

This appeal challenges the vires of the order dated 23-6-2005 passed by the Collector of Customs Appraisement, Karachi. The issue involved in this case is whether or not the present appellant was entitled for refund. The department's claims is that at the time of import, the facility of exemption was not available to the appellant, hence their claim of refund is not entertainable.

2. The appellant's claim is that vide S.R.O. 1076(I)/95 dated 5-11-1995, the Government granted tax exemption across the Board irrespective of the fact, whether or not the goods??????? were corresponding to the definition of machinery read with its table specifying the relevant tariff headings. The provisions of said S.R.O. reads as under: "....Notification No. S. R.O. 1076(I)/95, dated 5th November, 1995. In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and subsection (1) of section 13 of the Sales Tax Act, 1990, the Federal Government is pleased to exempt ring spinning frames falling under PCT heading 8445.2000 imported during the period commencing from the 14th June, 1984, and ending on the 30th June, 1995, and release of which had been allowed provisionally either in terms of interim orders from various Courts of law or by customs authorities from payment of so much of the customs duty and sales tax as is in excess of thirty per cent of the leviable rates of customs duty and sales tax at the time of filing of home consumption or ex-bond bill of entry subject to the following conditions, namely: (i) the thirty per cent duty and sales tax so recoverable shall be secured in the prescribed format provided in Deferment of Import Duties Rules, 1991 notified vide S.R.O. 490(I)/91, dated the 30th May, 1991; (ii) on receipt of deferred payment guarantee under the Deferment of Import Duties Rules, 1991, the bank guarantees secured previously shall be returned; (iii) the amount secured through deferred payment guarantee shall be subject to rate of mark up as provided under Customs Deferment of Import Duties Rules, 1991; (iv) the instalments of payment shall be payable in five equal instalments from the date of the issuance of this notification and the first instalment shall be payable after expiry of one year from the date of issuance of this notification; (v) the remaining four instalments shall be payable in four yearly instalments; and (vi) the benefit of waiver shall be admissible to concerned mills only on production of evidence duly endorsed by All Pakistan Textile Mills Association (APTMA) to the effect that they have withdrawn the cases from the Courts of law..."

3. The appellant further claimed that in terms of Board's letter C.No.6/6/Mach/96 dated 20-5-1996 the appellant's claim was very much in order. The said letter reads as under:

"....I am directed to refer to the above subject and to say that the cases of the Importers which had paid the duty but have not entered in litigation with the department may be processed for, refund. The refund will be allowed only to those Importers (i) who were subjected to statutory duty merely on the ground that ring spinning frames were being manufactured locally and (ii) who otherwise were eligible for concessions in accordance with S.R.O. 1076(1)/95...."

4. The perusal of the impugned order reveals that the appellant's claim was rejected by the respondent on the following grounds:

"....the Board's Letter No.6/6/Mach/96 dated 20-5-1996, referred by the importers is also of no avail as Central Board of Revenue clarified that refund shall be admissible to those importers:

(a) Who were subjected to statutory duty merely on the ground that ring spinning frames were being manufactured locally. (b) Who otherwise were eligible for concessions in accordance with S.R.O. 1076(I)/95. It has already been explained that exemption of customs duty was not admissible at the time of import in terms of S.R.O. 702(I)/80 and exemption was not denied merely on the ground of locally manufactured aspect. Further, the impugned goods were never provisionally assessed. The importers are not entitled for benefit of S.R.O.. 1076(I)/95. Therefore, The Board's aforesaid clarification of dated 20-5-1996 is of no help to the importers for getting refund. The aforesaid facts of the case clearly shows that the import of ring spinning frames made by Messrs Crescent Textile Mills was not hit by the dispute of local manufacturing and there was neither any objection at import stage nor they disputed the assessment after release of their consignment. The assessment was finalized by the appropriate officer which was not challenged with the appellate forum at the relevant time of assessment. As such assessment made in the year 1984 attained finality and cannot be reopened. The importers paid customs duty vide Cash No.8422 dated 18-11-1984 and filed claim on 14-7-1998 i.e. after 13 years. The claim is thereof barred by time under section 33 of the Customs Act, 1969...." 5.???????? From the pleadings of the parties, the following issues are framed in order to dispose of the case: (a) whether or not appellant's right of claim falls within the purview of Board's decision dated 20-5-1996? and (b) whether or not the claim is hit by limitation? ?

6. As regards the first issue, it is evident from the plain reading of the Board's letter dated 20-5-1996, that one has to meet with the following criteria for getting the paid duty and taxes back: (A) importers who had not entered into litigation with the department; (B) importers who were asked to pay statutory duty on the ground that the imported goods were locally manufactured; and (C) importers who were eligible for concession in terms of S.R.O. 1076(I)/95. 7.???????? From the pleadings, evident are the following facts: (i) benefit of exemption was not extended to the appellant on the ground that spinning machines were manufactured locally; . (ii) the statutory duty was paid; and (iii) the appellant's claim was entertained by the Board of decision on merits;????? (iv) no litigation was there between the parties on the said issue. ?

8. In the light of above facts, the appellant qualities for obtaining refund in terms of Board's letter dated 20-5-1996. The learned respondent has erred in holding that Central Board of Revenue had directed for the refund only in those cases, where the assessment had been made provisionally. It is manifest that provisional assessment was only made under the orders of the High Court i.e. where the importers had commenced litigation. Thus, the Board's order clearly and exclusively covered those classes of cases, where the provisional assessment was not made and the machinery was released on payment of cash duties.

9. As regards the question of limitation, the same does not apply in this case as the Government vide its letter dated 20-5-1996 has ex gratia allowed all the importers to claim subject to qualifying condition and the said decision was applicable with retrospective effect.

10. Having said that, this appeal is allowed, the impugned order is set aside, and the respondent is directed to decide the appellant's refund claim on merits and in accordance with law. H.B.T./56/Tax(Trib.)??????????????????????????????????????????????????????????????????????????? Appeal allowed.