Appeal No. 117 of 2002, decided on 4th October, 2002. Versus Appeal No. 117 of 2002, decided on 4th October, 2002.

ORDER

SAJID HUSAIN (MEMBER JUDICIAL). ‑‑‑This appeal has been filed against the order of the Assistant Collector of Customs Appraisement, Karachi, dated 14‑5‑2001.

2. The facts leading to the present case are that the appellant is manufacturer, of Television sets. He manufactures the said goods under a deletion programme approved by the Government. He is also entitled to the benefits extended by the Government in terms of Notification. Nos. 505 of 1994, 505 of 1995 and 555 of 1998. The said notification are extending the benefit of concessionary tax regime subject to fulfillment of certain conditions. The most important condition is to get the survey conducted to determine the quantities of goods approved from the office of Chief Survey and Rebates, Central Board of Revenue. The concession was available to those goods only which are not manufactured locally.

3. In the present case, the appellants got approved certain goods but the disputed item namely, B & W CRT of 14" and 12" was not included as an item in the table of items approved in the final certificate issued by the competent Authority. The said item was not included in the said list, obviously because the same was being manufactured locally, and was being purchased by the appellant. Somewhere in March, 1998 the local company stopped its production. The appellant accordingly started its import and got it released by submitting bond and undertaking that in a specified period, import of the said product will be authorized by the Central Board of Revenue. The Central Board of Revenue vide its letter, dated 31‑1‑2001 allowed import of the said goods but only to the extent of future imports. All previous imports as such became liable to normal customs duty. Accordingly the respondent issued a demand for recovery of outstanding customs duty from the appellant. As the appellant failed to get any import authorization from the competent Authority, the demand of duty amounting to Rs.45,07,387 was enforced and the appellant was directed to make the payment good.

4. Against the said order, the present appeal has been filed. The learned counsel appearing on behalf of the appellant argued that:‑‑‑

(a) the officer who issued the demand was not competent to take action;

(b) the inclusion of disputed item in the final survey certificate is a matter of procedure only and in spite of Central Board of Revenue's order, dated 31‑1‑2001, the appellant is entitled for the benefits extended vide Notifications Nos. 504 of 1994, 505 of 1995 and 555 of 1998;

(c) the only condition of S.R.O. is that goods are not locally manufactured and are, consumed for manufacturing complete units, all these conditions have been met, hence the procedural lacunas cannot frustrate the intention of Legislature; and

(d) no proper cause for demand was disclosed in the show‑cause notice.

5. On the other hand the departmental representative submitted that:

(i) The final survey certificate, dated 27‑3‑1993 does not allow import of Black and White picture tube CRT;

(ii) against valid survey certificate the import of disputed goods was permissible up to 30‑9‑1993, but in this case neither the appel lant had a valid certificate nor the imports .relate to that period;

(iii) in terms of the decision by the Central Board of Revenue, dated 31‑1‑2001 concessionary rate of duty was not applicable on the appellant's imports; and

(iv) clearances under dispute were made by making false statement that their case was under consideration before the Central Board of Revenue, whereas the appellant never approached the Central Board of Revenue during this period.

6. After having gone through arguments advanced by the parties, our findings on the disputed issues are as under:‑‑‑

(A) The objection of the appellant with regard to competency of the Adjudicating Officer to decide the case under hand is misconceived. The monetary limits fixed for various levels of Officers are applicable only in those cases where the Adjudicating Officer has to confiscate the goods or a penalty is to be imposed. In the instant case demand for escaped duty has been demanded and for that the Adjudicating Officer was fully competent. There is thus no force in this argument.

(B) It is a general principle of interpretation of statutes that the provisions of fiscal statutes are to be construed strictly. Where a notification lays down a concession and that too tied up with certain conditions or a specific mode, the intention of Legislature is to follow those conditions or a specific mode because, the condition or mode prescribe a mechanism to maintain a balance and equity in enforcing the regulations affecting the market economy, otherwise the unintended benefit, if extended, would distort the, market economy and may cause a disturbance in the required vertical or horizental equity thereby defeating the purpose of public interest. Therefore, enforcement of conditions of a particular regulation becomes mandatory for enforcement agencies and as such the claim of the appellant that merely a procedural mode be disregarded for extending benefit of concessionary customs duty to the appellant on disputed goods is not correct. The concessions tied up with conditions are to be availed in an appropriate manner, otherwise the action becomes illegal and not warranted by law. The claim of the appellant has, as such, no merits.

(C) It was argued that to case goods are not locally manufacture and the same are consumed as intended by the appellant. The appellant in that case will be entitled for claiming concessionary rate of duty. However, that is not the correct picture. The relevant notification very specifically ties up the extension of benefit of concessionary rate of duty by fulfilling certain conditions. The language of the notification in this regard‑ is not ambiguous. It reads‑‑‑

"...The Federal Government is pleased to exempt such raw materials and components as are not produced or manufactured in the country and are imported by a recognized industrial unit for the manufacture of items specified in column 2 of the Table below from so much of the customs duty chargeable under the First Schedule to the Customs Act, 1969, and so much of sales tax as are in excess of rates specified in Table II below, subject to these following conditions, namely:‑‑‑

(i) the manufacturer has suitable in‑house facilities to manufacture the items in respect of which he claims exemption under this Notification;

(ii) the manufacturer shall furnish to the Chief (Survey and Rebate), or any other officer authorized by the Central Board of Revenue in this behalf, in the specified form the list of items that he is manufacturing or intends to manufacture alongwith the details of raw materials and components required and the Chief or, as the case may be, such authorized officer, in consultation with the Collector of Customs or the concerned Government Department, will certify the annual capacity of the unit for the manufacture of various items and total annual requirements of various types of raw materials and components alongwith the quantity for the manufacture of each item.."

The appellant in this case has not completed the formalities in respect of disputed goods which came into effect from January, 2001. As such all previous imports made by the appellant did h contravene the conditions laid down in the relevant notifications. As such the appellant was not entitled to gain the benefit of concessions.

(D) The show‑cause notice clearly laid down the cause for demanded duty. The demand notice inter alia states in clear terms that since the disputed goods were not authorized by the Central Board of Revenue in its final survey certificate as such its import on concessionary rate of duty was illegal. The notice thus in categorical terms stated that the appellant was not authorized to claim concessions and as such the cause shown in the notice was perfectly in order. Had the appellant got the authorization of the competent Authority in respect of disputed goods for the disputed period, the notice would have become meaningless: however, the ideal conditions were not very much in favour of the appellant. Having said that, we believe that there is no force in this argument.

7. The upshot of the above discussion is that no case has been made out for interference by this forum. The appeal as such fails and the same is accordingly dismissed.

C.M.A./605/Tax (Trib.) Appeal dismissed.