Manufacturer or producer

2014 PTD 774 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss.32(1), (2) & 223Sales Tax Act (VII of 1990), S.2(16) & (17)Sales Tax Special Procedure Rules, 2007, Rr. 58(A) & 58(B)Manufacturer or producerPayment of value added tax at import stageDouble taxationScope

Appellant importer imported a consignment of Hot Rolled Deformed Round Steel Bars and got cleared the same without payment of value added tax and income tax

Importer was issued show-cause notice alleging that the goods imported by him had not gone through the process of manufacture, instead had been sold in same state condition, therefore he was liable to pay sales tax in lieu of value added tax

Additional Collector of Customs directed the importer to make payment of short realized amount of value added tax along with penalty amount

Appeal filed by importer before Collector of Customs (Appeals) was also rejected

Contention of the appellant was that he was a registered person under the Sales Tax Act, 1990, principally as a "manufacturer", therefore he was not liable to payment of value added tax at import stage

Validity

Any article imported in the same state condition was either converted into another distinct article or product or is so changed, transformed or reshaped that it became capable of being put to use differently or distinctly or included any process incidental or ancillary to the completion of manufactured product fell within the definition of manufacture or produce and the person or the unit engaged in such activity squarely fell within the ambit of manufacturer or producer

Appellant after importing the goods carried out the process of sorting, straightening, sand blasting, cutting, bending, etc. rendered the goods undergone the process of manufacturing and was not liable to pay sales tax on value addition

Show-cause notice and impugned orders were not warranted as manufacturer was not liable to pay additional tax at import stage, resultantly the impugned orders tantamount to "double taxation", which was not permitted by law which were set aside

Appeal was allowed.