ZAMAN CEMENT COMPANY (PVT.) LTD. Versus CENTRAL BOARD OF REVENUE

JAVED IQBAL, J. ---This appeal, by leave of the Court, is directed against the judgment dated 9-1-1997 passed by learned Single Bench of Lahore High Court, Lahore, whereby the Writ Petition bearing No. 16071 of 1996 preferred on behalf of petitioner has been dismissed.

2. Briefly stated the facts of the case as enumerated in the impugned judgment are that "the petitioner is a private limited company and opened its letter of credit for the import of machinery/components parts of machinery for the production of cement. The contract respecting the supply of this machinery was entered into on 14-10-1994, 20-12-1994 and 27-12-1994. According to the petitioner, the company was entitled for exemption on the import of such planter machinery as it is not manufactured locally and is imported during the period commencing on the 1st December, 1990 and ending on the 30th June, 1995, for setting up new units and for expansion or balancing, modernization and replacement of existing units in terms of S.R.O. No.484(1)/92 dated 14th May, 1992. The grievance being made is that by virtue of a subsequent notification bearing S.R.O. No.978(1)/95, dated 4th October, 1995 the said notification has been withdrawn: The prayer is that notwithstanding the later notification the respondent authorities directed release of machinery imported by them in terms of S.R.O. No.484(1)/92 dated 14th May, 1992". The said writ petition was dismissed, hence this appeal.

3. Leave was granted by this Court vide order, dated 31-3-1998 which is reproduced hereinbelow for the sake of convenience:--

"Learned counsel for he petitioner contends that the scope of section 31-A of the Customs Act, 1969, would not restrict itself to such Letter of Credit, contracts or agreements mentioned therein but it would also include within its ambit the cases covered by legitimate expectation, which arises consequent upon taking of decisive steps emanated from the expenditure incurred and efforts made towards the import of machinery and setting up of an industry in pursuance of the exemption granting S.R.O. Reliance was also placed on the case of M/s. M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan (Ministry of Finance), Islamabad (1994 SCMR 2123), wherein leave to appeal was granted, inter alia, to consider whether the cases therein fell outside the scope of section 31-A of the Customs Act, 1969 by invocation of doctrine of legitimate expectation. Leave to appeal is granted in the present case as well to consider the above point."

4. The main thrust of argument as adduced on behalf of appellant by Mr. Irfan Qadir, learned Advocate Supreme Court revolved around the contention that since a contract for the import of machinery required to be relieved was 'executed during the period when S.R.O. No.484(1)/92, dated 14th May, 1992 (hereinafter referred to as the S.R.O. No.484(1)/92 was very much in the field and thus issuance of S. R.O. No.978 (1)/95 dated 4-10-1995 would have no bearing on the question of exemption from customs duty/sales tax already granted vide the S.R.O. No.484(1)/92. It is urged emphatically that in view of similarity in between the case titled Gatron Industries Ltd. v. Government of Pakistan (1999 SCMR 1072) and the case of appellant no distinction could be made and the concession as granted by the apex Court in said case should have been given to the appellant which aspect of the matter escaped unnoticed and resulted in serious miscarriage of justice It is also contended that the contract for the import of machinery was executed on 26-2-1994 when the S.R.O.No.484(1)/92 and S.R.O. No.1284 were intact and accordingly the appellant was entitled to get the exemption as granted by the S.R.0. No.484(1)/92. It is contended that section 31-A of the Customs Act, 1969 would not affect the contracts already executed by the appellant for import of the machinery and more so, that the provisions as contained in section 31-A of the Customs Act were misinterpreted anti misconstrued by the High Court. It is urged with vehemence that the principles of legitimate expectation, locus poenitenatiae and promissory estoppel were ignored without any rhyme and reason which caused a serious prejudice.

5. Mr. A. Karim Malik, learned Advocate Supreme Court appeared on behalf of the respondents and vehemently controverted the view-point as canvassed by Mr. Irfan Qadir, learned Advocate Supreme Court for appellant by arguing that letter of credit was admittedly opened on 13-9-1995 while the date of bill of lading is 25-8-1996 whereas cut-out date mentioned in the S.R.O. No.484(1)/92 was 30-6-1995 hence no exemption from customs duty and sales tax could be granted by virtue of the said S.R.O. which was expired. It is also argued that in order to protect the legitimate interest of the industrialists subsequently another S.R.O. No. 978(1)/95, dated 4-10-1995 was issued granting 25 % exemption on customs duty and sales tax for the import of all such machinery regarding which letters of credit were opened before 30-6-1995 which some-how could not be got cleared due to expiry of the S.R.O. No.484(1)/92. It is also mentioned that the dictum laid down in the case of Gatron (supra) cannot be made applicable in view of the drastic distinction on factual plane. It is pointed out that in view of the provisions as incorporated in section 31-A, the S.R.O. No.484(1)/92 which in fact was expired, could have been even withdrawn as the said section was given retrospective effect and hence the question of any vested rights and its infringement does not arise.

6. We have carefully examined the respective contentions as agitated on behalf of appellant and for respondents in the light of relevant provisions of Customs Act, 1969, Sales Tax Act, 1990, Protection of Economic Reforms Act, 1992, and record of the case duly scrutinized with the eminent assistance of learned counsel and also perused the impugned judgment.

7. We first intend to examine the S.R.O. No.484(1)/92 which is reproduced hereinbelow for ready reference:--

"S.R.0, 484(1)/92. ---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 and in supersession of this Ministry's Notification NO.S.R.0.50(1)/92 dated the 28th January, 1992, the Federal Government is pleased to exempt such plant and machinery as is not manufactured locally and is imported during the period commencing on the 1st December, 1990 and ending on 30th June, 1995 for setting up new units and for expansion or balancing, modernization and replacement of existing units--

(a) in areas other than specified in Table-I from whole of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969 or as the case may be, the Sales Tax Act, 1990; and

(b) in the industrial estate specified in Table-II from so much of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969 or as the case may be, the Sales Tax Act, 1990, as is specified in Column (3) of the said Table subject to the conditions set out below, namely:--

(1) The importer shall, at the time of import of machinery, make a written declaration on the bill of entry to the effect that the machinery has been imported for a period located in areas other than those specified in Table-I or as the case may be; for the areas specified in Table-II.

(2) The importer shall furnish an indemnity bond in the Form set out below to the extent of customs duty and sales tax exempted under this Notification. The said indemnity bond shall be discharged subsequently on production of a certificate from the Assistant Collector, Customs and Central Excise, to the effect that the plant and machinery imported for setting up new units or expansion or balancing modernization and replacement of existing units located in the areas enjoying benefit of concession under this notification, have been duty installed in the aforesaid areas.

(3) The certificate of installation referred to in condition (2) shall be submitted to the Collector of Customs and not later than one year from the date of importation of the plaint and machinery to which it relates.

(4) The plant and machinery released under this notification shall not, within a period of eight years from its importation, be used in any area which is not eligible for the same concession. In case this condition is violated, the amount of customs duty and sales tax exempted under this notification and penalties that may be imposed in this behalf shall be recovered under section 202 of the Customs Act, 1969 (IV of 1969).

For the purpose of this notification, machinery shall mean,--

(i) machinery operated by power of any description, such as is used in any industrial process including mining and extraction of timber;

(ii) apparatus and appliances, including metering and testing apparatus and appliances specially adopted for use in conjunction with machinery specified in item (i) above;

(iii) power generating plant for operating item (i) above;

(iv) mechanical and electrical control and transmission gear adapted for use in item (i) above; and

(v) component parts of machinery as specified in items (i) and (ii) identifiable as for use or with such machinery."

A bare perusal of what has been reproduced hereinabove would indicate the ingredients of S.R.O. No.484(1)/92 which are as follows;--

(a) It pertained to the provisions as contained in section 19 of the Customs Act, 1969, and subsection (1) of section 13 of the Sales. Tax Act, 1990.

(b) Exemption was granted from customs duty/sales tax.

(c) The said exemption was for a stipulated period i.e., 1-12-1990 to 30-6-1995. .

(d) This said exemption was granted for a specific purpose of setting up new units, expansion or balancing, modernization and replacement of existing units.

(e) Full exemption was granted from customs duty/sales tax in all the areas not included in Table-I.

(f) The areas specified in Table-II was not granted full exemption from sales tax and customs duty but it was subject to 1 st Schedule to the Customs Act, 1969 and the Sales Tax Act, 1990, details whereof were mentioned in Column No.3 and also subject to certain conditions such as making a written declaration on the bill of entry to the effect that the machinery in question hat been imported for areas with an indemnity bond to be released after installation of such machinery within one year and more so that the machinery was imported was not to be used in any other areas at least for a period of eight years.

8. There is no denying the fact that while interpreting a notification "the purpose or purposes for which a notification is issued would be relevant in determining the vires of a notification. One of the practical and effective ways of proliferating the purpose is to see how far the suggested meaning destroys and defeats or promotes the ultimate purpose. In this research the Court is not confined to the literal meaning of the words used in the notification but it has to adopt a rational attitude by attempting to align its vision to that of the draftsman while drafting the notification in question". (Bindra's 'Interpretation of Statutes', 7th Edn, p.833). "Whether Government has power to grant by a Notification exemption from the provisions of an Act with retrospective effect should be seen from the provisions, of the Act, and not of the notification. Mere mistake in the opening part of notification in reciting the wrong source of power does not affect the validity of the amendments thereby. The expressions or words used in a notification must be read as such and not in any other manner, unless the context requires that the latter course should be followed"-. (See Understanding Statutes, Canons of Construction, 1 st Edn. 1997, p.786-787, by S.M. Zafar).

9. A careful analysis of the S.R.O. No.484(1)/92 and its ingredients would show that it is free from any ambiguity, absurdity or confusion and the language employed therein is so plain which cannot be twisted whatever principles of interpretation may be pressed into service because the question of any insertion, deletion or addition does not arise as it is to be interpreted in such a manner that the object of its issuance is promoted rather than hampered. We are of the considered opinion that while interpreting Fiscal Notifications the only guiding principle should be that no undue advantage could be taken on the basis of far-fetched or scholarly interpretation which the plain language does not imply nor intended to mean.

10. We have also considered the prime contention of learned Advocate Supreme Court on behalf of appellant that he was entitled to get exemption on the basis of contract executed for the import of machinery, letter of credit and bill of lading. We are not persuaded to agree with the said contention for the reasons that the exemption as granted by means of S.R.O. No.484(1)/92 was conditional and blanket authority was never given and it was a mandatory prerequisite that for availing such concession the import of machinery/plant must be made within stipulated period mentioned whereof was made in a categoric manner by specifying that concessionary period shall be commenced w.e.f. 1-2-1990 and expired on 30-6-1995, The abovementioned condition is quite simple and from whatever angle it may be examined the stipulated period neither can be curtailed or enhanced. Even otherwise, interpretation of a notification is required when there is some ambiguity in the language employed therein or some ambiguity is apparent as certain words used therein are subject to different interpretation or where language is found contradictory with the statute or against the object and reasoning or logic or where it is violative or derogatory of any provision of the statute or issue by some incompetent authority. "Canons of construction and rules of interpretation are directed to one and only one end, namely, towards finding out the intention of the Legislature. When this is clear, there is no room for praying in aid any extraneous principle of interpretation or canons of construction". (Mozaffar Ahmad v. Anwar Ali PLD 1965 Dacca 296, PLR 1964 Dacca 906, 16 DLR 336 [DB)]. As mentioned hereinabove the stipulated period in S.R.O. No.484(1)/92 was expired on 30-6-1995 and admittedly the date of bill of lading is 29-8-1996 while LC was opened on 13-9-1995 the date as mentioned hereinabove pertaining to bill of lading is indicative of the fact that at particular moment the S.R.O. No.484(1)/92 was not enforced and accordingly cannot be pressed into service for any exemption. By no stretch of imagination any benefit could be claimed under S.R.O. No.484(1)/92 after the expiry of specified period. In this regard we are fortified by the dictum laid down in case titled Army Welfare Sugar Mills Limited v. Federation of Pakistan (1992 SCMR 1652) as under:--

"It may be mentioned that by now; it is well-settled proposition of law obtaining in Pakistan that if an exemption from payment of excise duty or any other tax, has been granted for a specified period on certain conditions and if a person fulfils those conditions, he acquires a vested right, he cannot be denied the exemption before the expiry of the specified period, through an executive instrument like a notification, but he can be denied his vested right by a legislative provision, like section 31-A, which has been incorporated in the Customs Act in 1988 nullifying the effect of the judgment of this Court in the case of Al-Samrez Enterprises (supra)."

11. In view of the certain admitted facts such as the date pertaining to bill of lading, letter of credit and expiry of S.R.O. No.484(1)/92 the question of legitimate expectancy does not arise in absence of any base which is badly lacking in this case. We are not impressed by the contention as agitated time and again by Mr. Irfan Qadir, learned Advocate Supreme Court that the contract regarding import of machinery was executed when S.R.O. No.484(1)/92 was in the field as the said S.R.O. is silent regarding any contractual obligations irrespective of the date of execution and the only importance has been given to letter of credit and bill of lading which admittedly could not be opened/filed within stipulated period. It may be kept in view that "it is seldom, in construing mercantile contracts, that any technical artificial rule of law be brought to bear on their construction; the question really is the meaning of the language, and the grammatical meaning is, as in the other cases, the meaning to be adopted, unless there be reason to the contrary." (M'Connel v. Murphy, (1873) L.R. 5 P.C. 203, 218, Southwell v. Bowditch (1876) 1 C.P.D. 374, 376). As mentioned earlier, while discussing S.R.O. No.484(1)/92 and its ingredients, that exemption was conditional and no mandatory pre-requisites whatsoever could be complied with and resultantly S.R.O. No. 484(1)/92 would hardly render any assistance to the case of appellant. Even otherwise after insertion of section 31-A of the Customs Act, 1969 the customs duty/sales tax is to be deposited irrespective of the date of execution of a contract or the opening of letter of credit. The provisions as contained in section 31-A of the Customs Act, 1969 were dilated upon and discussed in a comprehensive manner in Mollasses Trading and Export (Pvt.) Limited v. Federation of Pakistan (1993 SCMR 1905) in the following words:--

"The language of section 31-A, as discussed above, clearly envisages and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, shall take effect with reference to the date of its issue, irrespective of the fact that the contract for the import of goods and the Letters of Credit had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative fiat, to use the phrase earlier mentioned. The Court would therefore, have to give effect to it notwithstanding the decision in the case of Al-Samrez Enterprise."

"The purpose of construction or interpretation of a statutory provision is no doubt to ascertain the true intention of the Legislature, yet that intention has, of necessity to be gathered from the words used by the Legislature itself. If those words are so clear and unmistakable they cannot be given any meaning other than that which they carry in their ordinary grammatical sense, then the Courts are not concerned with the consequences of the interpretation however, drastic or inconvenient the result, for the function of the Court is interpretation, not legislation." (Muhammad Ismail v. State PLD 1969 SC 241).

12. On the basis of what has been discussed hereinabove it can be said with certainty that the provisions as contained in section 31-A of the Customs Act, 1969 having retrospective effect are capable enough to meet all sorts of such eventualities and are applicable to all those cases where exemption was withdrawn after insertion of section 31-A of the Customs Act, 1969 which aspect of the matter was also discussed in case titled M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan (1998 SCMR 1404) as under:--

"The effect of insertion of section 31-A in the Customs Act is that when exemption from payment of customs duty granted by the Government under section 19 of the Act is withdrawn, then notwithstanding the fact that while exemption was enforced, the party had opened a letter of credit or concluded the contract with the foreign suppliers, the amount of customs duty payable on the goods would be that which might have become payable as a result, of withdrawal of the exemption. It is, therefore, quite clear that the right to claim exemption from customs duty under a notification issued under section 19 of the Act remains available to a party only as long as the exemption notification holds the field. However, as soon as the exemption notification is withdrawn, the payment of customs duty on the imported articles is to be determined in accordance with provisions of section 30 of the Act. The contention that section 31-A was inserted in the Act with the sole object of doing away with the effect of the judgment of Supreme Court in Al-Samrez's case and therefore, the exemptions granted by the Government after insertion of section 31-A are not controlled by section 31-A does not appear to be correct.

Section 31-A was inserted` in the Customs Act by section 5(2) of Finance Ordinance (II of 1988) which provided that section 31-A shall be deemed always to have been so inserted-in the Act, meaning thereby that it was given retrospective effect from the date the Customs Act, 1969 came into effect. There is nothing in the language of section 31-A to justify the interpretation that this section applied only to the cases covered by the judgment of Supreme Court in Al-Samrez's case or to those cases only, which did not acquire the character of past and closed transaction on the date of insertion of section 31-A in the Act. The language of section 31-A is wide enough to include within its ambit all those cases where exceptions have been withdrawn after the insertion of section 31-A in the Act as well.

Al-Samrez Enterprise v Federation of Pakistan 1986 SCMR 1917; Mian Nazir Sons Industries Ltd. v. Government of Pakistan 1992 SCMR 883; Federation of Pakistan v. Amjad Hussain Dilawari 1992 SCMR 1270; Molasses Trading and Export (Pvt.) Ltd. v. Federation of Pakistan 199,3 SCMR 1905; Federation of Pakistan v. Punjab Steel Limited 1993 SCMR 2267 and Government of Pakistan v. Muhammad Ashraf PLD 1993 SC 176 ref."

The dictum as laid down in Al-Samrez Enterprise v Federation of Pakistan (1986 SCMR 1917) would have no bearing subject to certain exceptions and "all those cases where the Bills of Entry were presented before 1st July, 1988 were cases of past and closed transactions. Insertion of section 31-A therefore, does not have the effect of destroying or re-opening the past and closed transactions." (1993 SCMR 1905; 1993 SCMR 2267; PLD 1993 SC. 132).

13. We are not impressed by the contention that section 31-A of the Customs Act, 1969 is violative of the provisions as contained in Article 2A and Article 25 of the Constitution of Islamic Republic of Pakistan or against the judicial pronouncements as it is well-settled by now that "The function of the judiciary is trot to legislate or to question the wisdom of Legislature in making a particular law nor it can refuse to enforce it even if the result of it 10 be to nullify its own decisions provided the law is competently made. Its vires can only be challenged being violative of any of the provisions of the Constitution and not on the ground that it nullifies the judgment of the Superior Court". (PLD 1989 Kar. 361). "Additionally, while there is a power in the Legislature and other taxing authorities to classify person or i properties into categories and to subject them to different rates of taxes, there F is none to target incidence of taxation in such a way that similarly placed persons are dealt with not only dissimilarly but discriminately. (See Elahi Cotton Mills Ltd. - v. Federation of Pakistan (PLD 1997 SC 582). While it remains true that a taxation measure cannot be struck down lightly and even tests of discrimination are rigorous, the rigours can be softened where the levying authority is a delegated one, coming to be exercised, not by the Legislature, but by the executive and, at that, with a degree not only of non concern but even abandon, throwing up a case of disregard of fundamental rights and Constitutional safeguards. Even so, the Court cannot assume either the legislative or the executive function". (Collector of Customs v. Flying Kraft Paper Mills (Pvt.) Ltd. (1999 SCMR 709). There is no cavil with the proposition that "vested rights cannot be taken away save by express words and necessary intendment. No doubt that the Legislature, is also competent to amend, vary or repeal the same but the right conferred through statute can only be taken away by legislative enactment and not by an executive authority through notification in exercise of the rule-making power or the power to amend, vary or rescind an earlier order/notification in the purported exercise of powers conferred under section 21 of the General Clauses Act, 1897. Collector of Central Excise and Land Customs v. Azizuddin Industries (Pvt,) PLD 1970 SC 439 and Messrs M.Y. Electronics Industries (Pvt,) Ltd. v. Government of Pakistan 1998 SCMR 1404." (Gatron Industries Ltd. v. Government of Pakistan 1999 SCMR 1072 but in the case in hand no vested right whatsoever was accrued and accordingly the question of its infringement does not arise. Let we mention here at this juncture that "a vested right is free from contingencies, but not in the sense that it is exercisable anywhere and at any moment. There is hardly any right which can be so exercised. There must always be occasions at which and circumstances under which they may be exercised. Those occasions and circumstances do not constitute contingencies, but are the peculiar characteristics of those rights." (M. Farani on "Interpretation of Statutes"', 1977 Edn, p.280). There is a distinction in between a "vested right" and, "assertion" which admittedly are not interchangeable. or synonymous terms. It is not a case of wrong mentioning or non-quoting of S.R.O. and had 14 been so such lapse could have been cured and rectified by this Court as there is no hurdle in doing so. If any authority is required reference can be made to case entitled Gatron (Industries) Ltd. v. Government of Pakistan (1999 SCMR 1072). As mentioned hereinabove S.R.O. No.484(1) of 1992 has rightly been mentioned but unfortunately after its expiry.

14. It has also been observed that in order to remove the hardships and financial loss of the industrialists after expiry of S.R.O. No.484(1)/92 another S.R.O. bearing No.978(1)/95, dated 4-10-1995 was issued granting 25 % exemption on customs duty and sales tax leviable on plant and machinery regarding which LC was opened prior to 30-6-1995 and which could not be cleared due to the expiry of S.R.O. No.484(1)/92 which concession should have been availed by the appellant instead of rushing towards the Courts of law by pressing into service the hypertechnical concepts and ticklish principles of law such as legitimate expectation, promissory estoppel, locus poenitentiae having no substantial bearing on the controversy and cannot override the statutory provisions of section 31-A of the Customs Act. We may make it clear here at this i juncture that "the rules of interpretation and canons of construction do not create any new law; they provide the means to understand the law and to give a correct meaning to it". (Abdul Kader v. Election Tribunal PLD 1966 Dacca 277).

15. Be as it may the impugned judgment is strictly in accordance with settled norms of justice and being well reasoned hardly calls for any interference. The appeal being devoid of merits is dismissed. Parties to bear their own costs.

S.A.K./M.A.K./Z-95/S Appeal dismissed.