Customs Appeal No.K-371 of 2000, decided on 23rd October, 2000. Versus Customs Appeal No.K-371 of 2000, decided on 23rd October, 2000.
ORDER
MALIK A. R. ARSHAD, (MEMBER JUDICIAL).--- This is an appeal against the order of the Collector of Customs, Karachi, passed in Order-in-Original No.62 of 2000.
2. The facts leading to the present appeal are that the appellant imported 15 consignments of Nissan Diesel Trucks in complete built up condition (CBU) condition from Japan and got the Imported goods released under the Prime Minister's Scheme for revamping of Public Transport on payment of Customs Duty @ 15% and free of the Sales Tax under S.R.O. 815(I)/93, dated 16-9-1993.
3. Post-importation scrutiny of the cases revealed that goods having been imported against letter of credit established after 24-7-1993, were not entitled to concessionary rate of customs duty and sales tax free under S.R.O. 815(I)/93, dated 16-9-1993 and S.R.O. 825(I)/93, dated 20-9-1993 read with Board's letter C. No.2(9)/Tax-II/93, dated 16-9-1993. Consequently, Show-Cause Notices were issued and the cases were adjudicated by the Principal Appraiser and Order-in-Original were issued to pay the short recovery of customs duty and sales tax which was leviable under S.R.O. 1105(I)/93, dated 18-10-1993. The appellants filed their first appeal which was dismissed vide order, dated 27-2-1994. The appellants invoked constitutional jurisdiction of the Honourable Sindh High Court through C.P. No.3590 of 1993 against the order, dated 27-2-1994. While the C.P. was pending before the High Court, Honourable Supreme Court of Pakistan announced its judgment in another identical case C.P. No. 28 of 1993 titled Syed Wasey Zafar v. Government of Pakistan, reported in PLD 1994 SC 621. In the light of the said judgment the Honourable Sindh High Court remanded the case to the Collector of Appeals for afresh disposal in the light of the said judgment.
4. The Collector of Appeals, after hearing, further remanded the case to the original Adjudicating Authority vide order, dated 18-10-1994 for adjudication. In the meantime, the Honourable Sindh High Court also modified its earlier order vide Miscellaneous No. 5901/94, dated 19-10-1994 and directed that instead of respondent No.2 i.e. Collector of Appeals, the respondent No.3 (A.C./P.A.) should hear and decide the case.
5. Under the orders of the Collector Appeals and the High Court, as aforesaid, the matter was adjudicated upon, after notice, by the Assistant Collector (Appraisement). The parties were heard and by order, dated 3-11-1994 the plea of appellants was accepted and the Show-Cause Notices were withdrawn. The concluding paragraph of the Adjudicating Officer is reproduced below:
"(10) It has been observed that under reference fifteen consignments of trucks in CBU condition were correctly assessed to duty @ 15% ad val. at the time of clearance and no further duty/taxes are leviable thereupon. It is, therefore, ordered that all the fifteen Show-Cause Notices issued in this regard stand withdrawn along with direction to release/return of Bank Guarantee submitted under the Sindh High Court orders, duly discharged."
6. A fresh Show-Cause Notice, dated 3-10-1996, was served upon the appellants, on the same facts as contained in the earlier Show-Cause Notices and further it was intimated to the appellants that the case was not examined in its true perspective, therefore, the Collector in exercise of powers under section 195 of the Customs Act, 1969 and subsection 4 of section 45-A of the Sales Tax Act, 1990, the case was re-opened and as such they were called upon to meet the charges levelled against them.
7. The appellants contested the Show-Cause Notice, and the learned Collector passed the impugned order and enforced the liability in terms of S.R.O. 490(I)/93 plus mark-up at 14% and additional tax in terms of section 34 of the Sales Tax Act, 1990 and section 86 of the Income Tax Ordinance, 1979. Hence, the present appeal before this Tribunal.
8. In defence, Mr. Aziz A. Sheikh, learned counsel for the appellant has raised the following legal questions in his Memo. of Appeal and had argued on the said lines:
(i) Learned respondent No.1 has erred in law by refusing the exemption backed by valid and operative S.R.O. 815(I)/93, dated 16-9-1993 thus have offended provision of Articles 4, 18 and 23 of Constitution 1973. Even C.B.R. for that matter got no authority of law and jurisdiction to levy and collect duty and taxes under cover of CGO 13 of 93 having neither legislative confirmation nor issued under section 19 of CA 69 read with section 21 of General Clause Act. The Order-in-Original impugned refusing benefits of S.R.O. 815(I)/93, therefore, suffers from incurable defect of law and liable to struck down (Reliance placed on Syed Wasey Zafar's case PLD 1994 SC 621 and Elahi Cotton Mills 1997 SCMR 582).
(ii) No so-called cut-off date viz. 24-7-1993 figures in S.R.O. 815(I)/93, dated 16-9-1993 but mentioned in CGO 13 of 1993 an instrument containing administrative instruction hence cannot prevail over specific provision of S.R.O. 815(I)/93 having statutory force at relevant time. The said CGO even otherwise addresses already lauded consignments only and does not extend to incoming consignments under S.R.O. 815(I)/93. The apex Court has held in Syed Wasey Zafar's case (PLD 1994 SC 621) that `Scheme' not abandoned or discontinued but only the duty structure was changed while CGO 13 of 1993 clearly suggests of discontinuation and termination of Scheme hence void and illegal to rely upon (Reliance placed on 1999 SCMR 1442) Sheikh Spinning v. Fed. of Pakistan and PLD 1993 SC 1232 Central Ins. v. C.B.R.).
(iii) Impugned Order-in-Original clearly disrespects judgment of Hon'ble High Court in C.P. No.3590/93 on two major points---
(a) It was a consent order directing afresh disposal in view of Syed Wasey Zafar's case as well as relevant notification (S.R.O. 815(I)/93). In compliance thereof a favourable disposition was made vide Order-in-Original, dated 3-11-1994.
(b) Therefore, respondent should have sought permission of Hon'ble High Court for reopening of said order under section 195 of C.A.
69. The respondent No.1 thus acted in a fanciful and arbitrary manner beside ignoring all formalities and requirements of law.
(iv) Goods were cleared in November, 1994 - January, 1994 under S.R.O. 815(I)/93 @ 15% duty and no sales tax. First show-cause notice was in time but second assessment order was passed on 3-11-1994 vide O. In. O. S.-I./Misc/1490/93-VIII (Now re-opened under section 195 of CA 69 read with section 32 ibid) vide SCN of even number, dated 3-10-1996 is clearly barred by limitation period of 6 months per SCN of even number already expired in May, 94 (from the clearance date) and in May, 95 (date of order re-opened) respectively. It is also settled that limitation mentioned under section 32 shall prevail over limitation period stated in section 195 ibid.
The allegation of short levy of duty is mainly due to self-presumed inadvertent error, misconstruction or misapplication of law by respondent No.1 himself thereby demanded duty and taxes at statutory rate of 60% plus sales tax @ 12.5%. No offence committed by appellant on other hand to attract provision of section 32 ibid.
Superior Courts have frequently held that duty was not recoverable under section 32(3) if show-cause notice not served within six months of clearance of goods or order of assessment unless untruly stated or misdeclared by importer on the face of it.
The impugned show-cause notice (SCN), dated 3-10-1996 and O. in O. 62 of 2000 based upon it is clearly barred by time under sections 32(3) and 5(a) of the Customs Act, 1969 and liable to be declared ab initio void and of no legal consequences to appellant (reliance placed on 1984 CLC 490, AIR Cal. 258, Rev. Order No.1(III) Cus-Appeal/86 under section 196 of CA).
(v) Jurisdiction of Collector of Customs was restricted to making reference to Collector (Appeals) only for determination of points arising out of the decision or order specified therein per section 195(2) of CA 69. It was also mandatory to make such application within 30 days from date of order passed under section 195(2) as amended vide Finance Act, 1989 which also provides time limit under subsection 3 of section 195 that no order shall be made under subsections 1 and 2 after the expiry of one year from the date of decision or order (in this case judgment was passed on 3-11-1994 hence expired on 2-11-1995). Since transactions were concluded (even re-assessed) on 3-11-1994 during the operation of the Finance Act, 1989 therefore it cannot be re-opened under the shelter of the subsequent amendment made vide Finance Act, 1995 being old, past and closed transaction. The said amendment vide Finance Act, 1995 not being procedural shall not have retrospective application to destroy accrued vested rights of appellant (Reliance placed on PLD 2000 Lahore 1 and PLD 2000 SC 18 Farhat Azeem v. Waheed Rasul).
(vi) The demand of Sale Tax @ 12.5% under S.R.O. 1105(I)/93, dated 18-10-1993 got no relevancy, legal force or nexus to S.R.O. 815(I)/93, dated 16-9-1993 granting exemption from sales tax. The said levy of Sales Tax was restricted vide S.R.O. 500(I)/88 (mean other than Imports under the `Scheme') by virtue of an amendment made only in said S.R.O. vide S.R.O. 1105(I)/93, dated 18-10-1993 for general imports. Hence demand of Sales Tax is liable to struck down being ab intio void and without lawful authority.
(vii) Imports of disputed vehicles were admittedly effected after prior booking and proofs were placed on record in file No.SI/Misc./12/96-VIII resulting into O. in O. No.25/96, dated 30-9-1996. Thus respondent No. 1 has only relied upon CGO 13/93 and C.B.R. instructions to deny right vested/accrued to appellant by virtue of S.R.O. 815(I)/93 which is not permitted besides contrary to principles of promissory estoppel (Reliance placed on 1997 SCMR 641 Gadoon Textile v. WAPDA).
(viii) He has further relied upon a judgment of this Tribunal passed in Appeal No.1740 of 1999 and 1741 of 1999 Pak Suzuki v. Collector, dated 13-3-2000.
9. The representative of the Department, Mr. Ghayassuddin Shaikh, has firmly stood by the impugned order.
10. We have heard the arguments of both sides in detail, gone through the record and the judgments cited at the Bar carefully.
11. Out of number of legal questions, we would like to take up the question as to whether time limit stipulated in section 32(13) shall prevail over the required time period to invoke provision of 195(2) of the Customs Act, 1969.
12. The admitted fact is that the order, dated 3-11-1994 was passed under the jurisdiction of adjudication. Show-Cause-Notices issued, parties appeared, made submissions, the matter was heard and a final decision was given. The Department did not file any appeal against this order of adjudication. It attained finality. The right accrued to the appellant remained undisturbed for one year and eleven months, the order was re-opened, that too without notice and at the back of the appellant, and second Show-Cause-Notice issued to contest the liability. The learned counsel has relied upon the judgment of the Honourable High Court of Sindh reported as Messrs Muhammad Hussain v. The Collector of Customs (Preventive) and 2 others (1991 MLD 1959). According to him the resolution of this question of law would decide the fate of the appeal. We have carefully gone through the judgment. It says:
"As is evident from section 32, subsections (1) and (2) thereof refer to recovery of customs duty not levied or short-levied or erroneously refunded on account of false statement made by any person is connection with any matter of customs, subsection (3) of the said section refers to recovery of duty or charges not levied or short-levied on account of inadvertence or misconstruction. The show-cause-notices earlier received by the petitioners from the respondents although indicate that customs duty had been short-levied on account of false statement made on behalf of the petitioners but the notices subsequently sent to the petitioners clearly bring the case against the petitioners within the purview of subsection (3) of section 32 of the Customs Act because allegations in regard to making of false statement were subsequently dropped. For sending of a show -cause-notice under subsection (3) a period of' six months has been provided for. Any show-cause-notice sent to a party beyond a period of six months would, therefore, be invalid. No doubt section 195 which confers powers of suo motu revision on the Collector of Customs to satisfy himself as to the legality or propriety of any order passed by a subordinate officer, provides for a period of two years for making such application and such period to be computed from the date of the order or decision sought to be reviewed but we would like to point out that the specific provisions in the Customs Act which deal with the recovery of short-levied duty or charges are embodied in section 32 and not in section 195 of the said Act. Since section 32(3) provides for a period of six months for reopening any case where duty has not been levied or short levied or erroneously refunded the respondents could not circumvent the provisions of section 32(3) of the Customs Act by sending a notice under section 195 of the said Act thus rendering the former nugatory. Although no decision of any superior Court in Pakistan has been cited before us on the point but the learned counsel for the petitioners has placed reliance upon the case of S. Vanktaesan v. Nihalchand AIR 1962 Cal. 258. In this case the High Court of Calcutta while dealing with the provisions of sections 39 and 190-A of the Indian Sea Customs Act which corresponded to the provisions of sections 32 and 195 respectively of our own Customs Act, in a more or less identical case has observed as follows:---
`The main point involved in this appeal is the question of construction of sections 39 and 190-A of the Sea Customs Act. It is clear that section 39 is a substantive provision which creates certain rights in favour of the Customs Authorities to recover customs duties and charges and it clearly imposes liability to pay such duties and charges on persons liable to pay the same. But it also prescribes a period of limitation within which the payment is to be demanded. The condition precedent to the accrual of liability to pay is that the Customs Authorities must issue a notice of demand to the person liable to pay within three months from the relevant date as defined or explained in subsection (2) of section 39 of the Sea Customs Act. If no such notice of demand is issued within the prescribed period, the amount of claim becomes irrecoverable. The section provides for certain contingencies under which certain customs duties and charges which have escaped levy and certain refunds granted under certain specified circumstances can be recovered. The Customs Authorities case is that the refund had been made erroneously to the respondents (see the letter, dated 15th September, 1958). So the contingency or case is one which falls under section 39. This being the position, can it be said that although no notice of demand was issued within three months of the date of refund and the claim for repayment has become irrecoverable, yet, by the indirect process of revision or review as envisaged in section 190-A of the Sea Customs Act, the order of refund can be revoked and the respondents made liable to repay the amount refunded? To give countenance to such interpretation will be to make the provisions of section 39 nugatory. The result of such construction will be that in every case of short levy or escapement of levy or erroneous refund, the provisions of section 190-A may be availed of, provided it is so availed of within a period of two years as provided in section 190-A and the bar of limitation as specified in section 39 can be got rid of or circumvented in this manner. Such an absurd intention cannot be imputed to the legislature. In my view, section 190-A has got the effect of overriding section 39 but it is subject to the said section. So this main point is devoid of any substance.'
"We are consequently of the view that the show-cause-notices sent by the respondents to the petitioners are invalid having been sent beyond the period of limitation provided therefor."
13. The learned counsel for the appellant has also raised the question of jurisdiction for the re-opening of the case on the basis of the then subsection (4) of section 195 of the Customs Act, 1969. Subsection (4) of section 195 is reproduced below:-
"(4) Where in pursuance of an order under subsection (1) or subsection (2) the Collector of Customs or any officer of Customs authorized in his behalf by him makes an application to the Appellate Tribunal or the Collector (Appeals) within a period of thirty days from the date of communication of the order under subsection (1) or subsection (2), such application shall be heard by the Appellate Tribunal or the Collector (Appeals), as the case may be, as if such application were an appeal made against the decision or order of the Adjudicating Authority and the provisions of the Act regarding appeals including the provisions of subsection (4) of section 196 shall, so far as may be, apply to such application."
In view of the then provision of subsection (4) of section 195 reproduced above, there is considerable force in the submission of learned counsel as regards the jurisdictional aspect of the matter. There was ample time with the learned Collector to proceed under this provision of law if he was dissatisfied with the adjudicating order, dated 3-11-1994, time spent elsewhere, and the order was allowed to attain finality. It is well-settled law that a thing is to be done as prescribed or permitted by law otherwise not. The non-compliance of the law as it stood at the relevant time is fatal to the case. Reliance placed by the learned counsel on the judgment reported as PLD 2000 Lah. 1 and PLD 2000 SC 18 Farhat Azeem v. Waheed Rasool are well-placed.
14. We respectfully follow the rules laid down in the judgment of the Honourable Sindh High Court, cited above, and the appeal succeeds on these legal questions alone.
15. The learned counsel has, on facts, relied upon a judgment of this Tribunal, passed in Custom Appeals Nos.1740 of 1999 and 1741 of 1999 which supports his case, which this Tribunal passed after considering the law laid down by the Supreme Court in Syed Wasey Zafar and 4 others v. Government of Pakistan (PLD 1994 SC 621). The portion of the said order is as follows:
(i) There is no denying the fact that the appellant being recognized assemblers of automotive vehicles enjoyed concessions under S.R.O. 495(I)/84 and S.R.O. 502(I)/94, dated 9-6-1994, who are simultaneously also approved as recognized assemblers for purpose of Yellow Cab Scheme and thus supplied vehicles under the Scheme availing further concessions as became available in pursuance of the said Scheme from time to time i.e. 75% of the duty in the disputed case.
(ii) Their position being assemblers could not be equated even for purposes of achieving desired uniformity as held by the Collector, as unlike commercial importers, they did not indulge in import of vehicles. They effected import of CKD kits under the concessions available to the Industry without discrimination and with uniformity. The expression statutory rate of duty as used in the Hon'ble Supreme Court's judgment therefore, is not relevant, so far as they were concerned. For them, in pursuance of the Government's policy, the effective rate, not withstanding the statutory rate as appearing in the First Schedule to the Customs Act, was 22% and not 100%. As such, having assembled vehicles from imported CKD, kits, the rate applicable to them was 75% of 100% ad val.
(iii) The verdict of the Hon'ble Supreme Court did not strike down S.R.O. 815(I)/93, dated 16-9-1993, which was the via media determined by the Government for those vehicles for which bills of entry had not been filed or were imported on or after 16-9-1993, which is not at all the case of the appellant as they did not import any vehicles as such but only kits for assembly of vehicles.
(iv) Government took a conscious decision to remove the confusion between leviable duty and statutory duty vide S.R.O. 1122(I)/95, by deleting the word "first Schedule" to the Customs Act, 1969, thus leaving the word leviable duty to achieve the purpose of law although the statutory duty even otherwise was not applicable in the case of the appellant.
16. In the result, we accept this appeal, set aside the impugned order, and hold that the Adjudicating Order, dated 3-11-1994 passed in Order-in-Original No.SI/Miscellaneous/1490/93-VIII, shall remain in the field and the appellant shall pay duty and taxes in terms of S.R.O. 815(I)/93, dated.16-9-1993, if not already paid.
C.M.A./104/Tax (Trib.) Order accordingly.