2008 PTD 1858

1. ABDUS SALAM KHAWAR, MEMBER (JUDICIAL)/CHAIRMAN.--- This appeal is directed against Order-in-Appeal No.255 of 2004, dated 18-5-2004 (dispatched on 5-11-2004) passed by the respondent No.1 whereby the refund claim of Rs.4,60,244 pertaining to the month of October, 2000 due to the blend ratio.

2. Brief facts of the case relevant to this appeal are that on the scrutiny of the record by the Sales Tax Department revealed that the appellant had declared blend of poly/cotton as 80x20% in shipping bill whereas normally said blend is not produced by spinning mills. Consequently the sales tax department approached Customs Department for test report of the shipping bills furnished.

2. The result of this test was as follows:---

3. S. No

4. S/B No. & Date

5. Description declared

6. Ascertained

7. 1.

8. 5373-6-10-2000

9. 35x35 PC 80:20% PC

10. 40x36 PC 62:38%

11. 2.

12. 5713-13-10-2000

13. 35x35 PC 80:20% PC

14. 36x36 PC 68:32%

15. 3.

16. 6111-25-10-2000

17. 30x30 PC 80:20% PC

18. 35x34 PC 63.37%

3. Thus the result revealed that blend and description of account declared and claimed did not correspond with the results mentioned in the test report. Thus the appellants tried to get illegal and inadmissible refund claim amounting of Rs.4,60,244. A show-cause notice vide C. No.670, dated 13-2-2001 was issued to the appellants proposing rejection of sales tax refund under the relevant provisions of Sales Tax Act, 1990 as specified therein. Vide the Order-in-Appeal No.45 of 2003, the Deputy Collector, Sales Tax (Refund-I), Faisalabad ordered the rejection of the refund claim amounting to Rs.4,60,244 and a penalty of Rs.1,38,073 equal to 3% of the amount involved was, also imposed. Aggrieved of the same, an appeal was preferred before the Collector (Appeals). Vide the impugned order, dated 18-5-2004 the appeal was rejected. Aggrieved of the same Messer SNA Textile Limited, Faisalabad (hereinafter referred to as appellant) came up before this Tribunal. It has been asserted that the impugned order is not sustainable factually and in law. It is maintained that the result of the customs lab was not reliable as blend ratio is to 62:38 PC, 63:37 PC are not manufactured by any textile mills in Pakistan. It was argued that the refund claim has wrongly been rejected. The supplies are granted under section 10 of the Sales Tax Act, 1990 and all reports are prepared on the basis of count of yarn not blend. Moreover, blend is construed only for customs rebate purposes, which is based on the components of the goods exported. The blend various is unavoidable just like count variation. It was pointed out that the Appellate Court, Lahore in case of Messrs Sitara Textile, Faisalabad remanded the case on identical grounds that when 100% + - ratio of count variation is allowed, blend ratio matter may also be examined accordingly. It was maintained that the exporters have no benefit to export 63:37 blend ratio which is not manufactured by the spinning mills in Pakistan hence, rejection of refund claim is clear violation of sections 7, 8 and 10 of the Sales Tax Act, 1990.

4. On the other hand, it was asserted on behalf of the respondent that misstatement was made by the appellant. The refund was claimed on the basis of mis-declaration. The test reports also belied the contentions of the appellant and, therefore, the Collector (Appeals) was justified in refusing the claim to the extent of three shipping bills mentioned above.

5. I have heard the Finance Manager appearing on behalf of the appellant and Syed Azhar Abbas, Auditor on behalf of the respondent and perused the available record. Admittedly, the following shipping bills were submitted by the appellant whereon he claimed the refund:--

19. S.No

20. Shipping Bill No. & Date

21. Description and blend declared

22. Description and blend ascertained

23. 1.

24. 5373 dated 6-10-2000

25. 35x35 PC 80:20% PC

26. 40x36 PC 62:38% PC

27. 2.

28. 5317 dated13-10-2000

29. 35x35 PC 80:20% PC

30. 36x36 PC 68:32% PC

31. 3.

32. 6409 dated 25-10-2000

33. 35x35 PC 80:20% PC

34. 36x36 PC 80.20% PC

35. 4.

36. 6410 dated 25-10-2000

37. 35x35 PC 80:20% PC

38. 36x36 PC 80.20% PC

39. 5.

40. 6411 dated 25-10-2000

41. 30x30 PC 80:20% PC

42. 35x34 PC 63: 37% PC

6. The Sales Tax Department not being satisfied with this blend and description of count approached the custom for test report, which showed variation in Shipping Bill No.5373, dated 6-10-2000. The description declared was 35x35 PC 80x20 PC whereas after the test the ascertained value was 40x36 and 62x38. In Shipping Bill No.6111, dated 25-10-2000, the description declared was 30x30 PC 80x20 PC whereas the ascertained value was 35x34 PC 63x67 PC. Vide the C.B.R.'s clarification issued vide C.No. 2(7)STP/99, dated 22-5-2001 variation upto 3% - + count variation was admissible whereas in the present case, the count variation for the above two referred shipping bills was beyond the permissible limit. Therefore, I feel that the rejection of the refund to that extent in respect of both the shipping bills was justified. But with respect to Shipping Bill No.5713, dated 13-10-2000, the ascertained value is within the permissible range. Therefore, the rejection of refund to that extent was unjustified. Resultantly, it is held that the appellant is entitled to a sum of Rs.2,19,466 being the refund claim pertaining to Shipping Bill No.5713, dated 13-10-2000.

7. Orders accordingly.

43. C.M.A./78/Tax(Trib.) Order accordingly.