Collector Of Customs, Karachi And Other vs M_S. Shafiq Textile Mills Ltd., Karachi
This matter concerns civil petitions for leave to appeal against a High Court judgment that set aside customs penalty orders. The core legal questions were whether Section 32 of the Customs Act, 1969, applies to refund claims where an applicant provides alternate descriptions of goods, and whether a plea regarding the failure to exhaust statutory remedies can be raised for the first time before the Supreme Court. The Supreme Court dismissed the petitions, holding that Section 32 of the Customs Act, 1969, is not attracted to refund claims where an applicant merely presents alternate legal arguments regarding the classification of goods, as this does not constitute a false or untrue declaration. Furthermore, the Court ruled that the objection regarding the failure to exhaust statutory remedies cannot be entertained for the first time in the Supreme Court if it was not pleaded before the High Court. The principle established is that misdeclaration under the Customs Act requires a false statement, not merely alternate arguments, and appellate courts will not entertain new pleas not raised in the court below.
- Does Section 32 of the Customs Act, 1969 apply to a refund claim where the applicant provides alternate descriptions of goods?
- Can a plea regarding the failure to exhaust statutory remedies be raised for the first time before the Supreme Court?
- Does the presentation of alternate legal arguments in a refund application constitute a false or untrue declaration under the Customs Act, 1969?
- Section 32, Customs Act, 1969
- Section 156(1)14, Customs Act, 1969
- Section 19, Customs Act, 1969
- Article 199, Constitution of the Islamic Republic of Pakistan, 1973
MR. JUSTICE HAMID ALI MIRZA.-(l). These three civil petitions for leave to appeal are directed against common judgment, dated 21.1.2003 passed by learned Division Bench of the High Court of Sindh, Karachi, whereby Constitution Petitions Nos. D-l226 to 1228 of 1994 (Shafiq Textile Mills Ltd. v.
Federation of Pakistan and others) were allowed, thereby show-cause notices issued by the Collector of Customs and impugned orders, dated 7.2.1994 with regard to imposition of penalty, were declared to be without lawful authority and of no legal effect.
2. Brief facts of the case are that the respondent filed the above said Constitution petitions before the High Court of Sindh stating therein that they are engaged in the business of manufacture and export of "Cotton Yarn" and "Cotton Thread" as such exported several consignments of the aforesaid product in the years 1990 and 1991. After the export of aforesaid goods the respondent filed application for refund of export duty stating that the customs duty was neither payable on "Cotton Thread" nor on "Cotton yarn" vide S.R.O. No. 738(I)/90, dated 11-7-1990. However, on 9-8- 1992 the petitioner No. 1 Collector of Customs (Export) issued show- cause notices to the respondents to show cause why action should not be taken against him for wilful attempt to defraud the national exchequer by making false and untrue declaration within the provisions of section 32 of the Customs Act, 1969 and punishable under section 156(1)14 of the Act to which the respondent replied explaining the position and after hearing the respondents, the petitioner No. 4, Central Board of Revenue, by order, dated 7.2.1994 rejected the claim for refund and imposed penalties in various amounts in respect of each claim made by the respondent. The respondents, therefore, filed Constitution petitions before the High Court of Sindh wherein he challenged the issuance of show- cause notices and orders, dated 7-2-1994 with regard to imposition of penalty which Constitution Petitions were allowed by learned Division Bench vide impugned judgments, dated 21.1.2003 which have been challenged before this Court through these civil petitions for leave to appeal.
3. We have heard learned counsel for the petitioners and perused the record.
4. Contention of learned counsel of the petitioners when these petitions were taken up on 27-12- 2004 was that as in the identical C.Ps. No. 497-K to 505-K of 2002 leave was granted by this Court vide order, dated 19-7-2002, therefore leave in these three petitions may also be granted. In the circumstances we directed learned counsel for the petitioners to submit the copies of said writ petitions and judgments of said identical cases in which leave was granted by this Court therefore the instant petitions were adjourned to be re-listed today i.e. On 29.12.2004. Today we have gone through the additional documents viz. Copies of Constitution Petitions No. D-480/95, D-2180/94 to D-2187/94, and (ii) copy of Judgment, dated 1-2-2002 filed by learned counsel for the petitioners.
5. We find that the parties in the said petitions are the same but same involve different facts and law points, therefore it could not be said that as in the identical cases, leave was granted, therefore in the instant three petitions leave be granted on the principle of consistency. In the said petitions leave was granted against the judgment, dated 1-2-2002 wherein contention of the petitioner (respondent in these petitions) was that Notification, dated 11.7.1990 making distinction between the same "yarn" produced on different machines and only on the basis of its method of final wrapping on "cones or Hanks" or on "cheese" was discriminatory and without lawful authority and of no legal effect as section 19 of the Customs Act, 1969 only empowered the respondents (petitioners in these petitions) to grant exemption from customs duty subject to any restriction and limitation on any goods liable to duty consequently imposition of penalty in all cases through the said notification was mala fide, arbitrary, illegal and further action of the Customs Authorities under section 32 of the Act for misdeclaration against refund claim was also without jurisdiction. Learned Division Bench in the said judgment in view of the stated grounds, facts and law came to the conclusion that provisions of section 32 of the Customs Act were not attracted as it was a case of refund whereas provisions of section 32 of the Act dealt with (a) duty or charge not levied, (b) short levied, and (c) erroneously refunded. However in the instant case refund of the amount was claimed by the respondent on the ground that customs duty was not payable either on "Cotton Thread" or "Cotton Yarn" vide S.R.O. No. 738(1) of 1990, dated 11-7-1990 and there was no misdeclaration on the part of the respondents to attract section 32 of the Customs Act. Learned Division Bench of the High Court as per impugned judgment held that the, respondents took alternate pleas in the application of refund stating that the goods first were stated as "Thread"' and then alternately termed it as "cotton yarn" to support their argument would not make a false or untrue statement but would be an alternate argument in support of their claim therefore section 32(1) & (3) of the Customs Act would not be attracted, consequently it could not be misdeclaration as such no penalty could be imposed hence petitions were allowed. In view of above factual and legal position, the plea raised for grant of leave that in the identical case leave whs granted would have no merit and force.
5A. Finally learned counsel for the petitioners has argued that the respondents did not exhaust the statutory remedies available to them before filing the constitution petitions under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973, therefore Constitution Petitions were not maintainable. In the circumstances learned counsel was asked to show us from the impugned judgment as to whether the said plea was raised before the High Court. We have ourselves also gone through the impugned judgment but are unable to find such plea having been raised by the petitioners before the High Court, therefore the said plea cannot be allowed to be raised before this Court of the first time. No other plea has been raised before us by the learned counsel for the petitioners.
6. We find that no exception could be taken to the impugned judgment as neither factual nor legal infirmity in the judgment has been pointed out by the learned counsel for the petitioners. We find that these petitions have no merit, therefore, leave to appeal is declined and the petitions are dismissed.