Custom Appeal No.K-3 of 2002, decided on 17th January, 2003. Versus Custom Appeal No.K-3 of 2002, decided on 17th January, 2003.

ORDER

The question' involved in this case is of refund of 2% service charges with reference to the PSI to the appellants claimant in the light of judgment passed by Honourable Supreme Court of Pakistan or not.

2. The objection on behalf of the department is that every claimant is entitled for refund of 2 % service charges subject to the clarification of Ministry of Law and Justice who had observed that only those claimants are entitled for refund of services charges who had not passed on incidence on the consumers. But the perusal of judgment passed in Appeal No.586 of 1997 viz. Collector of Customs v. Sh. Spinning Mills by Honourable Supreme Court of Pakistan show that no such condition has been laid down therein nor such point was even raised by Customs Department before Honourable Supreme Court of Pakistan. Therefore, any decision made by Ministry of Law and Justice cannot override the judgment of Supreme Court of Pakistan.

3. No doubt, legislation can be made to impose fee in respect of any of the matters in the Federal Legislative List, but definitely not for pre-shipment inspection, the benefit of which has to go to the companies appointed to carry out the inspection and not to the payees, of the fees. Imposition of such fees is not in lieu of services to be rendered for the benefit of its payees.

To sum, up in the light of the definition and distinction between "Tax" and "Fee" as demonstrated above, the service charge as levied by virtue of section 18-B, inserted into the Act through Tax Adjustment Ordinance, the charge is not a fee, because it is neither meant for benefit of payees not its collection enables the Government to carry out expenses, for the benefit of importer. The world has shrunk into a global village. With the advancement of information and media technology the determination of prices is an easy task, and the, quality of goods to be exported or imported can be checked through the machinery provided by the Customs Act.

For the foregoing reasons, we are of the view that the imposition of service charge as imposed under section 18-B, of the Act towards the pre-shipment inspection is ultra vires of the powers of the Federal Legislature.

4. In view of the above decision appeal of the appellant is allowed and the-impugned judgment is hereby set aside.

C.M.A./765/Tax (Trib.) Appeal allowed.