2007 PTD 2399
HAFIZ MUHAMMAD ANEES, MEMBER (TECHNICAL).--- This judgment disposes of Sales Tax Appeal No.692/LB of 1999 filed by Messrs Colony Textile Mills Ltd., Multan against the Order-in-Original Noll/99 dated 12-11-1999 passed by the Collector, Customs & Central Excise, Multan holding that in terms of section 31-A of the Customs Act, 1969 read with sections 30 and 31 ibid, the assessment of .goods to 15 % central excise duty in pursuance of S.R.O. 1051(I)/99 dated 16-9-1999 is in accordance with law and procedure.
2. Briefly stated, the relevant facts of the case are that the appellant imported raw cotton classifiable under heading 5201.0000 from Switzerland for which letter of credit was established on 6-7-1999 with Habib Bank Ltd., Bahawalpur Road, Multan. Subsequently, the goods in question started arriving in part shipments, one part arrived at Karachi by INAS Medan Vessel under I.G.M. No.1211 dated 10-8-1999, Index No.42 and the other part arrived by Bern Hard Vessel under I.G.M. No.1232, dated 16-8-1999, Index No.90. On arrival, the goods were allowed in bonding in their approved private bonded warehouse as admissible under the law. The appellant filed three ex bond bills of entry having Machine No.00230, 00231 and 00232 all dated 24-9-1999 with benefit of S.R.O. 454(I)/96, dated 13-6-1996. The goods became liable A to 15% Central Excise Duty after having been warehoused in pursuance of S.R.O. 1051(I)/99 dated 16-9-1999. Accordingly, the clearance was allowed only after payment of leviable central excise duty which was paid by the appellant under protest.
3. The appellant filed Writ Petition No.8980 of 1990 before the Honourable High Court, Lahore which was dismissed vide order dated 27-9-1999 with the instructions to the appellant to approach the Collector concerned and raise all the points before him who would decide the matter on merit within two weeks. The Honourable High Court further ordered that in case the appellant is not satisfied -with the orders passed by the Collector concerned, it can avail other remedies available in the hierarchy under the Customs Act, 1969. Accordingly, the appellant approached the Collector. Various hearing opportunities were provided. The appellant relied upon 1986 SCMR 1917 in the case titled as Al-Samrez Enterprises v. Federation of Pakistan 1998 SCMR 1404 in the case titled as Messrs M. Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan and others 1994 SCMR 712 in the case titled as Assistant Collector Customs Central Excise and Sales Tax, Mardan v. Messrs Gadoon Textile Mills Ltd. Swabi and claimed that the vested right already created cannot be taken away by subsequent notification as letter of credit had already been established.
4. The matter was examined and the contentions of the appellant in the presence of section 31-A of the Customs Act, 196S were not found tenable and as such the petition was dismissed by the Collector concerned vide Order-in-Original No. 11 of 1999 dated 12-11-1999.
5. Being dissatisfied and aggrieved of the aforesaid decision, the appellant filed the present appeal mainly on the plea that the Honourable High Court Sindh ordered in respect of writ petitions that S.R.O. 1051(I)/99 dated 16-9-1999 is not applicable to the consignments, letters of credit of which had been established before the issue of the above notification. On the other hand, the departmental representative rebutted the contentions raised by the counsel for the appellant and contended that in the presence of section 31-A of the Customs Act, 1969, the central excise duty @ 15% was correctly levied acid collected and the aforesaid judgments do not come to support the contentions of the appellant.
6. We have carefully gone through the record of the case. Also, heard the arguments of both the sides. Anxious consideration has been given to the contentions raised by the counsel of the parties. Section 30 of the Customs Act, 1969 provides that the rate of duty applicable to any imported goods shall be the .rate of duty in force in the case of goods cleared from a warehouse under section 104 on the date on which a bill of entry for clearance of such goods is manifested under that section and in case of non-payment of duty within seven years from the date of manifestation of the bill of entry, the applicable rate of duty would be the date on which the duty is actually paid. Section 31-A of the Customs Act, 1969 speaks of the effective rate of entry and being more relevant in the instant case is reproduced below:
"(i) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court for the purpose of sections 30 and 30A, the rate of duty applicable to any goods shall include any amount of duty imposed under section 18 and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sales of goods or opening of a letter of credit in respect thereof."
7. The appellant relying upon the exemption in central excise duty provided under S.R.O. 454(I)/96 dated 13-6-1996 established letter of credit and accordingly imported raw cotton into the country and on arrival of the same, filed two in-bond bills of entry for warehousing the same in their private bond as admissible under the law. Subsequently the appellant filed three ex bond bills of entry all dated 7-9-1999 claiming exemption of excise duty as per the aforesaid S.R.O. but the same was denied to the appellant by the Collectorate on the basis that the aforementioned S.R.O. dated 13-6-1996 was amended vide S.R.O. 1051(I)/99 dated 16-9-1999. Section 31-A of the Customs Act, 1969 read with section 30 provides that the crucial date for determination of the rate of duty etc. is the date of filing of ex bond bill of entry in case the duty is paid within seven days after manifestation otherwise the crucial late would be the date of payment of duty acid taxes and includes the amount of duty that may have become payable in consequence of the withdrawal of the whole yr any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sales of goods or opening of a letter of credit in respect thereof the appellant has mainly relied upon the judgment of the honourable Nigh Court Sindh in the case titled Kohinoor Textile Mills Ltd. v. Federation of Pakistan 2002 PTD 121 the honourable High Court had observed as under:---
"Section 37 of the Central Excise Act empowers the Central Board of Revenue to make rules so as to carry out the purpose of the Act. Section 37(2) in turn prescribes a number of items for which the rules could be made without of course limiting the general rule making power for those items which" are not so mentioned therein. The delegation thus, is only for assessment or collection, but not for the creation or imposition of a charge. The term `assessment' points out to the process of ascertaining, adjusting or determining The amount of tax payable (see Punjab Cables v. Government of Pakistan PLD 1989 Lah. 121); whereas the term `charge' denotes "the very imposition or levy to the tax (see Friend Sons v. Deputy Collector PLD 1989 Lah. 337). Similarly, `collection' means the very process of recovery of the tax. In other words for any tax or in any taxing statute there are three stages; firstly, the imposition or creation of the very tax or levy known as the "charge". The provisions which deal with the latter are called the charging sections. Secondly, the quantification of the tax of levy which is called "assessment" and thirdly, the recovery of the levy or tax is called "collection". The latter two are the machinery provisions, which were contained in the machinery section of the statute.
In the present case the delegation conferred through section 37(2)(i) of the Central Excise Act on the Central Board of Revenue is only with regard to, "assessment and collection" and not imposition or "charge" of the duty. In striking contrast, the Central Board of Revenue in notifying the fifth proviso to rule 9 of the Central Excise Rules has travelled far beyond the delegation conferred upon it since the said proviso has been extended to the creation of a "charge" along with "collection". In other words, the C.B.R. under section 37 has not been given the power to introduce the charge. The fact that section 31-A of the Customs Act introduces, a new charge and is not merely a machinery provision seems settled from Crescent Pak Industries (Pvt.) Ltd. and M.Y. Electronics. It is equally settled law that rules made under delegation of powers cannot go beyond the mandate conferred by the parent statute (see Malik Muhammad Din v. Trustees of the Port of Karachi PLD 1966 Kar. 518 and Chairman, Railway Board v. Wahaduddin Sons PLD 1990 SC 1034. The use of word "charge" in the fifth proviso to rule 9 of the Central Excise Rules is thus ultra vires the power conferred on the C.B.R, under section 37(2)(i) of the Central Excise Act, the departmental representative has contended that section 37(2) of the Central Excise Act only lists out the items recommended for rule making and such items are not exhaustive since the said section 37(2) expressly .provides that the rules could be made in respect of the items mentioned without prejudice to the generality of the foregoing power i.e. to make rules generally. On the strength of this argument the departmental representative has contended that even if the delegation to introduce the "charge" cannot be spelt out from section 37(2)(i), such power is implicit from the general rule making power conferred through section 37(2) and the opening words of section 37(2). A short answer to this argument is that even if the subject or item of rule making mentioned in section 37(2) are not exhaustive, the general rule making power has to be read as ejusdem generis with the items or subject lined in section 37(2). As already pointed out "assessment and collection" on one hand are completely opposed to "charge". The two are not ejusdem generis by any stretch of imagination. Thus, the general rule making power delegated under section 37 cannot be extended to creation of a charge. We would in fact go a step further. Even if section 37, hypothetically speaking had delegation to the C.B.R. the power to introduce a charge or a levy, the said delegation would be bad since it is now pretty much settled that the power to impose or introduce a tax, levy or a fee is only legislative functions which cannot be delegated (see M. Afzal and Sons v. Federation of Pakistan PLD 1977 Lah. 1327). In this manner the term "charge" used in the fifth proviso of rule 9 of the Central Excise Rules is read down and found to be unenforceable (for the powers of the Court to read in and read down provisions of a statute (see Abdul Rahim v. U.B.L. PLD 1997 Kar. 62.)
8. In another Constitutional Petition No. D-1532 of 1999 the appellant assailed the aforesaid non-availability of the exemption under S.R.O. 454(I)/96 dated 13-6-1996 wherein the Honourable Lahore High Court has held as under:---
"After filing of this petition, the petitioner deposited an amount of Rs.1600781 with the Customs Department to get their goods released to avoid further demurrage on them.
The validity of S.R.O. 1051{I)/99 dated 16-9-1999 amending or superseding S.R.O. No.454(I)/96 dated 13-6-1996 was considered by this Court in the case of Kohinoor Textile v. Federation of Pakistan 2002 PTD 121 and by judgment dated 13-12-1999 the Court held that section 31-A of the Customs Act, 1969, cannot be extended to Central Excise Duty as there is no comparable provision in the Central Excise Act, 1944 and the fifth proviso to Rule 9 of the Central Excise Rules, 1944 does not alter the position i.e. that it cannot in any way be interpreted to take away the vested rights of a person. Mr. Saeed submits that this petition may also be allowed in the same terms. However, Mr. Raja Iqbal learned counsel for respondent Nos.2 and 3 disposed the grant of the petition and showed us a copy of the order of Hon'ble Supreme Court of Pakistan dated 7-7-2000 wherein the Supreme Court has been pleased to grant leave to appeal against the aforesaid judgment.
It is an established law that one Division Bench of High Court is bound by the judgment of another Division Bench passed by the same Court and that the judgment of a High Court is good law until it is reversed by the Hon'ble Supreme Court of Pakistan. The copy of C.P.L.A. No.97-K of 2000 produced by Mr. Raja Iqbal does not show that the judgment of this Court in C.P. No. D-1582 of 1999 has been reversed. Accordingly, this, petition is allowed and it is held that "petitioner is entitled to the benefit of I S.R,O. 454(I)/96 dated 13-6-1996 and is not liable to pay Central Excise Duty under S.R.O. 454(I)/96 dated 13-6-1996 and is not liable to pay Central Excise Duty under S.R.O. 1051(I)/99, dated 16-9-1999.
Mr. Saeed, however, submits that the petitioner shall not claim refund of the sum of Rs.16,00,781 deposited with the respondent until the decision of the Supreme Court in the case of Collector of Customs v. Kohinoor Textile Mills and others i.e. C.P.L.A. No. 97-K of 2000 and other similar petitions on the same point.
The petition stands disposed of in the above terms".
9. In view of the aforesaid position we hold that the appellant is entitled to claim the refund of the central excise duty already paid under protest in case the decision of the honourable Supreme Court of Pakistan is in their favour in the case of Collector of Customs v. Kohinoor Textile C.P.L.A. No. 97-K of 2000 and other similar petitions on the same point wherein the Supreme Court has been pleased to grant leave to appeal against the aforesaid judgment.
10. The appeal filed by the appellant is disposed of accordingly.
11. Inform all concerned through registered post.
C.M.A./80/Tax(Trib.) Appeal allowed.