GHULAM HAIDER VS MUHAMMAD KHAN
1997 P T D 1901
[Lahore High Court]
Before Sh. Ijaz Nisar and Tanveer Ahmad Khan, JJ
SALEEM & CO. and others
Versus
CENTRAL BOARD OF REVENUE and others
Writ Petition No. 17231 of 1995, decided on 28/08/1996.
(a) Customs Act (IV of 1969)---
----S. 18(1)(2)---Regulatory duty, nature of---Nature of regulatory duty has been considered to be essentially a "customs duty "---Contention that regulatory duty which was imposed under S.18(2) of Customs Act, 1969, would not come within purview of customs duty as envisaged under S.18(1) of Customs Act, 1969, was repelled.
Gadoon Textile Mills Ltd. v. Assistant Collector and others PLD 1992 Pesh. 191; M/s. Khyber Agro (Pvt.) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853; Karachi Electric Supply Corporation Ltd. v. National Industrial Relations Commission and another PLD 1982 SC 113; Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670; M/s. Yousuf Rerolling Mills v. The Collector Customs and others PLD 1989 SC 232; Chairman, Regional Transport Authority Ltd. v. Pakistan Mutual Insurance Company PLD 1991 SC 14 and M/s. Khyber Agro (Pvt.) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853 ref.
(b) Words and phrases---
----"Import"---Meaning---Word "import" has been defined to mean bring into the country.
Pakistan Textile Mill Owners' Association, Karachi and 2 others v. Administrator of Karachi and 2 others PLD 1963 SC 137; East and West Steamship Co. v. The Collector of Customs and others PLD 1976 SC 618 and The Lahore Textile and General Mills Ltd. v. The Collector of Customs, Lahore and 2 others PLD 1988 Lah. 563 ref.
(c) Customs Act (IV of 1969)---
----Ss.18(2) & 31-A---Regulatory duty, imposition of---Federal Government was fully competent to impose regulatory duty subject to the inbuilt conditions of S.18(2) of Customs Act, 1969---In cases of regulatory duty, Notifications issued under S.18(2) of Customs Act, 1969 imposing said duty would not be applicable in those cases where goods were imported into Pakistan before issuing that notification---Mere opening of letters of Credit or conclusion of contracts with foreign manufacturers, however, would not exempt importers from payment of regulatory duty in. view of powers conferred under S-31-A of Customs Act, 1969---Contention of importers that prior to the issuance of notification imposing regulatory duty they having entered into various contracts with foreign manufacturers and having opened Letters of Credit, were entitled to exemption from regulatory duty, was repelled, in circumstances.
Messrs Qaiser Brothers (Pvt.) Limited v. Government of Pakistan and others PLD 1991 SC 884; Government of Pakistan and others Muhammad Ashraf and others PLD 1993 SC 176; Pakistan v. Salahuddin PLD, 1991 SC 546; Messrs Abdul Majid v. Government of Pakistan and others 1993 SCMR 17; Gadoon Textile Mills Ltd. v. Assistant Collector and others PLD 1992 Pesh. 191 and The Lahore Textile and General Mills Ltd. v. The Collector of Customs, Lahore and 2 others PLD 1988 Lah. 563 ref.
(d) Customs Act (IV of 1969)---
----Ss.18, 19 & 31-A---Imposition of regulatory duty---Exemption-- Exemption from payment of regulatory duty would continue till Notification granting exemption was rescinded---No specific orders having been passed about the rescission of Notification granting exemption from payment of customs duty, the concession of exemption granted by Notification in question would continue and effect of exemption Notification could not be destroyed by modification of earlier Notification on the ground that under S.21 of General Clauses Act, 1897 Government could exercise power of modification---Before claiming the benefit of exemption, conditions laid down in exemption granting Notification importers had to satisfy the Authorities that their claim of exemption strictly fell within purview of exemption granting Notification.
Messrs Khyber Agro (Pvt) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853; Al Samrez Enterprises .v. The Federation of Pakistan 1986 SCMR 1917 and Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 ref.
(e) Customs Act (IV of 1969)---
----Ss.18 & 31-A---Regulatory duty---Exemption---In case Notifications granting exemption from regulatory duty were still holding field, regulatory duty in those cases could not be claimed from importers and that exemption/benefit would remain in field till express rescission of exemption granting Notifications---Authorities having not exercised power to withdraw exemption under S.31-A of Customs Act, 1969, benefit granting Notification, could not be denied to importers irrespective of the fact whether exemption so granted was in toto or to a certain percentage.
(f) Customs Act (IV of 1969)---
----Ss.18 & 31-A---Sales Tax Act (IX of 1990), S.13---Exemption from sales tax---Withdrawal of exemption---Notification qua withdrawal of exemption in the payment of sales tax, could not be given retrospective effect and vested right already accrued to importers With regard to exemption of sales tax, could not be interfered with by executive action mainly for the reason that no parallel provisions existed in Sales Tax Act, 1990 like that of S.31-A of the Customs Act, 1969.
Al-Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917 Muhammad Abdullah v. Government of Pakistan through Secretary, etc. PLD 1992 Kar. 266; Punjab Steel Ltd. v. Deputy Collector of Customs, Dry Port, Lahore and others PLD 1989 Lah. 237 and Messrs Ahmad Investment (Pvt.) v. The Federation of Pakistan and another 1994 PTD 575 ref.
Irfan Qadir, Ashtar Ausaf Ali, Salman Akram Raja, Tariq Javid, Imtiaz Rashid Siddiqui, Shahid Hamid, Khalid Pervaz Kh., Jawar A. Naqvi. S. Manzoor Ali Shah, Umar Ata Bandial, Mian Abdul Ghaffar, Ch. Ghulam Mustafa Bandesh, Zahir ud Din Khan and Sh. Shahid , Waheed for Petitioners.
Saleem Sahgal, Naeem Sahgal, Sh. Izhar-ul-Haq, Malik Muhammad Suleman Awan and Faqir Muhammad Khokhar, Dy.A.-G. for Respondents.
Dates of hearing; 3rd to 5th, 9th to 12th, 17th to 19th, 23rd and 25th June, 1996.
JUDGMENT
TANVEER AHMAD KHAN, J.---AS common question of law is involved in all these petitions, the schedule whereof is appended. As such, we propose to dispose of them by this single judgment.
Facts briefly are that through Notification/S.R.O. No. 1050(1) of 1995, dated 20-10-1995 emanated from the Ministry of Finance and Economic Affairs, Government of Pakistan regulatory duty was imposed upon the goods imported into Pakistan at a rate of 5 % and 10% ad volarem respectively excepting certain goods, the particulars whereof are given in the Notification itself.
The exception has also been taken to another Notification similarly emanated from the Ministry of Finance and Economic Affairs, Government of Pakistan whereby exemption earlier granted/accorded under section 13 of the Sales Tax Act, 1990 through different S.R.Os. in the payment of Sales Tax, issued earlier have been withdrawn through Notifications dated 4-4-1996.
It is argued that the impugned Notifications cannot be made applicable to the petitioners for the reason that in some cases contract for the import of goods had already been completed with the foreign manufacturers prior to the promulgation/issuance of impugned S.R.Os. while in another L.Cs. had been opened and in some cases goods subject-matter of the Constitutional petition had already been imported into Pakistan. Elaborating it further learned counsel have pointed out that section 30 of the Customs Act, 1969 provides dates on the basis of which the value and the rate of duty are to be determined, which inter alia, provides that in case of goods declared for home consumption under section 79, the value of the imported goods and rate of duty shall be, on the basis of date on which a bill of entry is presented under that section. Since in some cases the goods had been imported before the levy of regulatory duty by virtue of Notification dated 29-10-1995, the concerned importers would be liable to pay the same under the impugned Notification.
Another argument has been advanced that during the currency of exemption granting/concessional Notifications the regulatory duty which is in essence, a customs duty, cannot be imposed as the same would tantamount to depriving the petitioners of their vested right. It is further contended that even by the Notification in question the importers stand exempted from the payment of regulatory duty because under clause 11(b) of the Notification the goods chargeable to duty at the rate of 65 % ad volarem are exempted from the payment of regulatory duty. Elaborating their arguments they contended that if the concession granted by various S.R.Os. had not been there, the petitioners would have been required to pay customs duty at the rate of 65%. And if the intention had been to charge regulatory duty on the goods leviable to 65 % customs duty also no exception would have been created in the impugned Notification. A prayer has been made for refund of the regulatory duty recovered from the petitioners falling in the above category. In this behalf reliance has been made on Gadoon Textile Mills Ltd. v. Assistant Collector and others PLD .1992 Pesh. 191, M/s. Khyber Agro (Pvt.) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853 (Peshawar). The regulatory duty/sales tax, it is argued, are confiscatory in nature and no reason at all has been advanced for their imposition and the circumstances prevailing in the country in fiscal circle have not been mentioned warranting their imposition.
Learned counsel for the Customs Department as well as learned Deputy Attorney- General have supported the impugned S.R.Os. contending that section 18(2) of the Customs Act, 1969 is a self-contained provision providing for the imposition of regulatory duty, as such, the exemption granted under section 19 of the Customs Act would not encompass this levy. Being a different levy, the benefit provided under the exemption granting Notification, cannot be extended to cover the regulatory duty levied through impugned Notification and no vested right can be claimed by the petitioners on the basis of the same. Another argument has been advanced that the newly added section 31-A of the Customs Act, 1969 has changed the whole complexion whereby the concept of vested right under exemption granting Notification has been completely demolished. To advance it further it has been stated that even if after the words "Customs duty" used in the exemption granting Notification is held to include Regulatory duty even then by virtue of inclusion of section 31-A in the Customs Act, the regulatory duty being a separate levy would have to be paid by the petitioners and no vested right can be claimed.
As far as the withdrawal of exemption in the payment of Sales Tax is concerned, learned counsel appearing for the respondents has argued that in view of section 21 of the General Clauses Act, the authority has got vast power to withdraw the same and there can be no estoppel in this regard against the respondents.
We have considered the contention. We have noticed that earlier the regulatory duty was envisaged under section 2(a) of the Tariff Act, 1934 which was inserted through Finance Act, 1964 (Act V of 1964). Through Finance Act, 1975 (Act L of 75) Section 18 of the Customs Act was substituted and by this legislation, section 2(a) of the Traiff Act, 1934 was lifted and was formed as section 18(2) of the Customs Act, 1969. The Tariff Act, 1934 was also repealed under the Finance Act, 1975. Section 18(2) .of the Customs Act was further substituted through Finance Act, 1994 (Act XII) of 1994) and the newly substituted section 18(2) of the Customs Act is as under:
"(2)The Federal Government may, by notification in the official Gazette, levy, subject to such conditions, limitations, or restrictions as it may deem fit to impose a regulatory duty on all or any of the goods specified in the First Schedule at a rate not exceeding one hundred per cent. of the value of such goods, as-determined under section 25 or section 25-B and may, by a like notification, levy a regulatory duty on all or any of the goods, exported from Pakistan,
(i) at a rate not exceeding one hundred per cent. of the value of the goods as determined under section 25 or section 25-B, if such goods are specified in the Second Schedule; and
(ii) at a rate not exceeding fifty per cent. of the value of the goods as determined under section 25 or section 25-B, if such goods are not specified in the Second Schedule; "
It will be appropriate if at this juncture we also reproduce S.R.O. No.1050(I)/95, dated 29-10-1995 whereby regulatory duty has been imposed as well as Notification dated 4-4-1996 whereunder exemption in Sales Tax earlier accorded through different S.R.Os. was withdrawn.
Notification No. 1050(1)/95, dated 29-10-1995 is as under:
"S.R.O. 1050(1)/95.---In exercise of the powers conferred by subsection (2) of section 18 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to levy a further regulatory duty on imports of goods appearing in the First Schedule to the said Act as detailed below:--
(i)the goods chargeable to a statutory or concessionary rate of zero per cent. or sixty per cent. statutory duty shall be charged a regulatory duty a 5 % ad valorem on import into Pakistan except the following namely:-
(a) Wheat;
(b) Fertilizer,
(c) Power Generation plants for which letters of support have been issued by the Government upto 3,000 MW;
(d) Import of accompanied and unaccompanied baggage;
(e) Goods imported under diplomatic concessions; and
(f) Newsprint imported by publishers of newspapers and periodicals subject to production of a certificate from Ministry of Information and Broadcasting; and
(ii)the goods chargeable to a statutory or concessionary rate other than zero per cent. on the import into Pakistan shall be charged to a regulatory duty at the rate of ten per cent. ad valorem except the following:
(a) defence imports;
(b) goods chargeable to duty at the rate of sixty five per cent. ad valorem; and
(c) the following P.O.L. products:--
(i) Motor spirit
regular super and
premium class;
(ii)H.O.B.C.;
(iii)M.T.B.E.;
(iv)S.K.O.;
(v)H.S.D.;
(vi)L.D.O.;
(vii) J.P:I;
(viii)J.P.4;
(ix)Furnace oil; and
(x)Asphalt
This Notification shall have effect from the 29th day of October, 1995.
It is apt to mention here that different notifications were issued on the 4th of April, 1996 whereby exemption granted in the payment of Sales Tax was withdrawn. For facility of reference one such notification issued on the 4th of April, 1996 is reproduced below:
GOVERNMENT OF PAKISTAN
MINISTRY OF FINANCE AND ECONOMIC AFFAIRS.
Islamabad, the 4th April, 1996.
NOTIFICATION
(CUSTOMS)
S.R.O. (I)/96.---In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969) and subsection (1) of section 18 of the Sales Tax Act, 1990 the Federal Government is pleased to direct that the following further amendments shall be made in this Ministry's Notification No. S.R.O. 24(1)/96, dated 8-1-1996, namely:-
In the aforesaid Notification, in the preamble:-
(1)the words, brackets, figures and comma "and subsection (1) of section 18 of the Sales Tax Act, 1990" shall be omitted; and
(2)the words "and whole of sales tax" shall be omitted.
2. This Notification shall come into force from the 8th day of April, 1996.
(Sd.)
Riaz Ahmad Malik
Additional Secretary."
The reading of section 18(2) of the Act makes it very clear that the Federal Government is fully empowered subject to such conditions, limitations or restrictions as it may deem fit by issuing notification to impose regulatory duty on all or any of the specified goods in first schedule at a rate not exceeding 100% of the value of such goods as determined under section 25 or section 25-B of the Customs Act. This power is exercised so as to control the fluctuating prices trend in the international market, apart from generating extra funds/revenue for the State. It is to regulate the import and export of the items so as to maintain proper balance in the ever fluctuating international market. The word "regulate" has been defined in Black's Law Dictionary in the following terms:
"To fix, establish, or control, to adjust by rules."
In Chamber's dictionary it is defined as under
"To control, to adopt or to adjust by rules.
In Karachi Electric Supply Corporation Ltd. v. National Industrial Relations Commission and another PLD 1982 SC 113 it is held that "it is synonymous with the word "control" or "given". Accordingly, in ordinary parlance it implies the right to prescribe and enforce all such proper and reasonable rules as may be deemed necessary and wholesome in conducting an avocation in a proper and orderly manner. "
It is pertinent to mention here that the power to impose regulatory duty by the Federal Government under section 18(2) of the Customs Act has been conceded' by the superior Courts. In a case titled Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 it was held as under:
"The levy was described as 'regulatory duty' as it was imposed to maintain a proper balance in fluctuating market as a result of sharp fall in the international process of iron and steel scrap and certain other iron and steel items with the result that the importers imported these materials at a much lower cost but regardless of it the prices did not fall to any substantial extent in the domestic market, and it were the importers only who were the beneficiaries and were earning windfall profits. Therefore, the discretion to levy "regulatory duty" was a device to enhance the rate of duty at any time during the course of the year so as to achieve a balance. The Legislature, in the circumstances could not know as to the details of the fluctuating international prices from time to time during course of the year and for that matter could not also be in a position to enhance the levy to obtain a balance of the prices in the domestic market nor was it in a position to speculate the details of the conditions, limitations or restrictions which were necessary to be imposed for the levy of 'regulatory duty'. It was in these circumstances that it provided the framework for the levy of 'regulatory duty' to be imposed and, gave the discretion to-the Federal Government to make a levy so as to achieve a balance in the price in the local market."
The aforesaid judgment was considered by the Supreme Court in case of M/s. Yousuf Rerolling Mills v. The Collector Customs and others PLD 1989 SC 232 wherein it was held that the discretion of the Federal Government given under section 18(2) is not untrammelled but is qualified with restraint according to the language of the subsection. The Judges held as under:
The discretion given in subsection (2) of section 18 of the Act had to be exercised within the legislative framework as observed by this Court in Abdur Rahim v. Federation of Pakistan PLD 1988 SC 670 at page 670. Here what is to noticed in the subsection is the exercise of the discretion within the legislative framework, that is, firstly, that the discretion to levy is subject to such conditions, limitations, or restrictions as the Federal Government may deem fit to impose, secondly, the specification of the articles by reference to the schedule and the maximum of the regulatory duty payable on the valuation of the articles as determined under section 25 and thirdly, that the imposition of the levy was for a limited period of a financial year unless the levy was earlier withdrawn.
This demonstrates that the regulatory duty is imposed to deal with a special situation and was for a limited period as by virtue of subsection (4) of section 18 of the Act, it would stand automatically rescinded on the expiry of the financial year in which it was issued if not rescinded earlier. As already stated the discretion is not unrestricted and there are certain inbuilt restrictions provided by subsection (2) of section 18 itself which control this discretion. It has to be exercised within the mandate provided by law. Reference is made to Chairman Regional Transport Authority Ltd. v. Pakistan Mutual Insurance Company PLD 1991 SC 14 where the learned Judge of the Supreme Court observed in the following terms:
"Structuring discretion means regularising it organising it, producing order in it, so that discretion will achieve a higher quality of justice. The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure ...When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible time, the then, as circumstances permit, should further confine their own discretion through principles and rules. The movement from vague standards to definite standards to broad principles to rules may be accomplished by policy statements in. any form, by adjudicatory opinions or by exercise of the rule-making power...When legislative bodies delegate discretionary power without meaningful standards administrators should develop standards at the earlier feasible time, and then, as circumstances permit, should further confine their own discretion through principles and rules. "
The nature of regulatory duty has been considered to be essentially a "customs duty" and it is so covered by the expression "duties of the Customs". The argument of the learned counsel for the respondents that regulatory duty which is imposed under section 18, subsection (2) of the Act would not come within the purview of customs duty as envisaged under section .18(1) of the Act is devoid of any force. In this respect was are fortified from the observation made by the Hon'ble Supreme Court in Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 where it was held as under:
The regulatory duty, has, therefore, direct nexus to the goods imported which are liable to customs charge. If one were to give to it its discretionary meaning then it nowhere in the context in which it occurs exerts that meaning. In essence, therefore, it can have no other sense but that of a customs charge imposed to maintain a proper balance in a fluctuating market although it is described by a different nomenclature which does not make it distinct from customs duty. Subsection (3) of section 18 of the Act further reinforces the concept of its being an additional customs charge. "
Similarly in Gadoon Textile Mills Ltd. v. Assistant Collector and others PLD 1992 Pesh. 191 it was held as under:
"Such being the case, we have no hesitation in holding, qua part (a) of question posed in para. 9 (supra), that regulatory duty falls within the expression 'duty of the customs' which in its pith and substance is not different at all from what is commonly called customs duty and that section 19(1) of the Customs Act, 1969 shall accordingly apply equally to subsection (2) of section 18 (ibid) as well. "
This view of the Peshawar Division Bench quoted above was approved by the Hon'ble Supreme Court where the leave against the same was refused vide No.99-P/1992 and subsequently while dismissing the Civil Review Petition No. 35 of 1993 reported in The Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others v. M/s. Godoon Textile Mills. Ltd. Swabi through General Manager (Operation) 1994 SCMR 712 where it was held as under:
"The careful perusal of section 18 above makes it clear that customs duties are imposed under subsection (2). Subsection (3) thereof clarifies that regulatory duty levelled under subsection (2) shall be in addition to any duty levied under subsection (1) or any other law for the time being in force and be levied on and from the date specified in the notification. According to subsection (4) any notification issued under subsection (2) shall if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued. Section 19 confers wide powers on the Government to exempt any goods from the whole or any part of the customs duty chargeable thereon."
It was further observed that:---
"In this background of the situation, the only interpretation which can be put on the notification is the total exemption from the whole of customs duties and sales tax and not only those mentioned in section 18(1) of the Customs Act. As held by this Court in the cited judgment referred to above, the regulatory duty is an additional customs charge leviable under the various sections of the Customs Act and it may look unreasonable if customs duty leviable under subsection (1) of section 18 is declared exempted whereas the additional customs charge in the form of regulatory duty is held recoverable. The words used in the notification, 'whole' and ' leviable' suggested that the said industrial estate was exempted from all customs duties leviable in past or in future."
A reference may also be made to Messrs Khyber Agro (Pvt) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853 where it was held as under:
"The perusal of the mentioned judgment of this Court revealed that it was held therein that the regulatory duty is essentially customs duty and the Supreme Court agreed with this interpretation. We, therefore, while relying on the said decision accept these writ petitions only to the extent that the petitioners, are not liable to pay the regulatory duty from the date of enforcement of the exemption granting Notification No.517(1)/89,dated 3-6-1989, till the date this notification was rescinded and that the respondents are not legally competent to demand regulatory duty from the petitioners during the said period and was also declare that the respondents are liable to refund whatever amount they have received on this count from the petitioners."
This amply demonstrates that by calling it a regulatory duty, it would remain to be a customs duty in pith and substances as made applicable under section 18(1) of the Customs Act, exemption whereof can be granted under section 19 of the Customs Act, 1969.
In the impugned Notification qua the imposition of regulatory duty the respondents have used the word "Import" of the items. The word "Import" has been defined to mean bringing into the country. In Pakistan Textiles Mill Owners Association, Karachi and two others v. Administrator of Karachi and two others PLD 1963 SC 137 it was held as under:---
'Import' and 'export' in their ordinary and natural sense mean to bring into or to take out of or away from a particular place. The introduction of the notation that there must also necessarily be a mixing up in mass with other goods within those limits seems to us to impose an unjustifiable restriction upon the meaning of the word 'Import'. In a taxing statute, as in any other statute, we see no reason to depart from the general rule that words used in a statute must first be given their ordinary and natural meaning. It is only when such an ordinary meaning does not make sense that resort can be made to discovering other appropriate meanings. In the present case no such difficulty is created by giving the words 'Import' and export' their ordinary and natural meaning."
Similarly in East and West Steamship Co. v. The Collector of e Customs and others PLD 1976 SC 618 it was held as under:
"The word 'Import' carries the natural meaning of "bringing in" and has no technical Waning. Mr. A.K. Brohi construed the word Import' as entailing the entire process of filing Bill of Entry, discharging from the vessel at a wharf, assessment of value of the goods and the duty payable on them. We, however, see no warrant; for placing this artificial meaning or the word 'import'. In Black's Law Dictionary 'importation' is defined as "The act of bringing of goods and merchandise into a country from a foreign country and 'imported' in general, has the same meaning in the Tariff Laws that its etymology shows, in proto, to carry in. To 'import' is to bear or carry into. As imported article is one brought or carried into a country from abroad In Wharton's Law Lexicon 'import' is given the meaning goods or produce brought into a country from abroad."
It has been held in The Lahore Textile and General Mills Ltd. v. The Collector of Customs, Lahore and. 2 others PLD 1988 Lah. 563 that if on the day the good reached the territorial water of the Custom port of Pakistan no customs duty or surcharge is leviable, or if any duty or surcharge is leviable but the same stands totally exempted, goods would not be chargeable to duty or surcharge.
As far as the argument of the learned counsel for the petitioners that they have prior to the promultation/imposition of regulatory duty entered into various contracts with foreign manufacturers and opened the L. Cs. would not be of any assistance to them. It has been held in Messrs Qaiser Brothers (Pvt.) Limited v. Government of Pakistan and others PLD 1991 SC 884 as under:
"It may be pointed out that when the Government issues an import licence for the import of certain goods, .it does not make any representation that it would not levy any new customs duty or would not increase its rate. In fact there is no nexus between issuance of an import licence and levy of a new customs duty or increase in its rate. Section 39 of the Act provides the mechanism for determining the value of the imported goods and the rate of customs duty. It is not the case of the petitioners that the respondents are not determining the amount of the customs duty in terms of the above section. We may also observe that levy of new customs duty or increase in its rate is normal incident of a business transaction. "
The learned Judges further observed as under:
"It may further be observed that levy of regulatory duty not only regulates the price structure of the time concerned. But it also generates additional fund for the public purpose. To put constraint upon the exercise of the power contained in subsection (2 1 of section 18 of the Act of nature sought to be pressed into service by the petitioner will not be in the interest of the public. This Court already in the case of Messrs Sh. Abdur Rahim, Allah Ditta v, Federation of Pakistan and others PLD 1988 SC 670 has examined the vires of the regulatory duty and has held that "what is prohibited by the Legislature is the delegation of its function to make the law but not the authority exercised under and in pursuance of the lam itself to another agency." It was also held that levy of the regulator duty in terms of subsection (2) of section 18 of the Act was intra vires. It may be observed that the Legislature has provided the framework for the levy of the regulatory duty, the extent, the period for which it can be levied and the authority which can levy: The levy of the regulatory dun in question is within the above framework and, therefore, no exception can be taken to it, the impugned judgment of the High Court seems to be in consonance with law."
Again in Government of Pakistan and others v. Muhammad Ashraf and others PLD 1993 SC 176 it was held as under:---
"However, as already discussed abstention from subjecting a particular item of goods from regulatory duty at a given time, or for that matter at the commencement of the financial year, does not create any vested right in favour of any party who may have entered into contracts on that basis, because, the authority to levy the duty is the sovereign power of the State by the device of delegated legislation for imposing a tax. So far as the argument on promissory estoppel is concerned, there is no question of a representation on the part of the Government, which is an essential element of the principle of promissory estoppel, when particular item is not subjected to duty at the initial stage. In a recent case reported as Pakistan v. Salahuddin PLD 1991 SC 546, the operation of the doctrine of promissory estoppel is stated to be subject to several limitations, including the one that it cannot be invoked against the Legislature or the laws framed by it because the Legislature cannot make a representation. If there was any representation extended by the law, was that subsection (2) of section 18 of the Act the Government could impose a duty at any time. Another limitation spelt out by the aforesaid decision was that no agency or authority can be held bound by a promise or representation not lawfully extended or given. It goes without saying that it is difficult to hold that the mere fact that no duty was imposed when the initial notification was issued imposing duty on other items, it amounted to "a valid promise or representation' on the part of the Government not to invoke its powers of imposition of the duty, if upon consideration of the relevant pertinent factors to became necessary to impose the duty subsequently during the same year. Therefore, reliance on the doctrine of promissory estoppel and on Pakistan v. Salahuddin PLD 1991 SC 546 is inapt besides the facts in that case being distinguishable."
Similarly in the case of Messrs Abdul Majid v. Government of Pakistan and others 1993 SCMR 17 where it was held that doctrine of promissory estoppel cannot be invoked in case of withdrawal of exemption from the payment of customs and any amount of duty which becomes payable in consequence of withdrawal of concession from duty, even though such withdrawal took place after the conclusion of a contract for the sale of goods or opening of letter of credit would be payable in terms of section 30 with reference to the filing of bills of entry.
The exemption in the payment of customs duty envisaged under section 19 of the Customs Act can now be interfered with by inclusion of section 31-A in the Customs Act and a vested right cannot be pressed into service in that regard section 31-A is couched in the following words:
"31-A. Effective rate of duty.---(1) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of sections 30 and 31, 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 sale of such goods or opening of a letter of credit in respect thereof. "
However, the exemption granting notification would not be interfered with unless and until the power given to the Federal Government under section 31-A is exercised for the withdrawal of the same. It is to be appreciated that there cannot be any implied withdrawal of the exemption as argued by the learned counsel for the respondent. It has been held in Gadoon Textile Mills Ltd. v. Assistant Collector and others (PLD 1992 Peshawar 191) that section 19-A of the Customs Act shall accordingly apply equally to subsection (2) of section 18 of the Act with the result that incentive given to the importer through exemption granting notification cannot be frustrated simply by promulgation of notification imposing regulatory duty. It has been held in this precedent that the exemption so granted shall continue between the period of issuance and recession of the notification.
It was also held in M/s. Khyber Agro (Pvt.) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC (Peshawar) 1853 that exemption from the payment of regulatory duty continues till the notification granting exemption is rescinded. Since in the case before us no specific orders had been passed about the rescission of the notification granting exemption from the payment of customs duty the concession/exemption granted by the notification in question shall continue and the effect of the exemption notification could not be destroyed by modification of earlier notification on the ground that under section 21 of the General Clauses Act, Government could exercise power of modifications. Al Samrez Enterprises. v. The Federation of Pakistan 1986 SCMR 1917 is referred to in this behalf.
However, before claiming the benefit of exemption, the conditions laid down in the exemption granting notification, the petitioners have to satisfy the respondents that their claim strictly falls within the purview of the exemption granting notification. In this regard the observation of the Supreme Court in Messrs Army Welfare Sugar Mills Ltd. and others 'v. Federation of Pakistan and others 1992 SCMR 1652 is very apt which is to the following effect:
"There are two basic principles of construing a provision of a statute involving exemption from payment of tax, namely, the first rule is that the burden of proof is on the person who claims exempting. The second rule is that the provision relating to grant of tax exemption is to be construed strictly against the person asserting and in favour of taxing officer."
As already stated that the chargeability would be dependent upon the import of goods. In PLD 1988 Lah. 563 it was held that the imported goods would become chargeable to duty under section 18 of the Customs Act the moment they entered territorial water of the customs port of Pakistan. It is to be seen that if on the day, the goods are imported in Pakistan, the duty up to certain percentage is leviable, the importers would be required to pay that amount of duty as envisaged at the time of importation and the impugned notification of 29-10-1995 cannot be made applicable in his case. However, the condition precedent for this claim would be that the subject goods must have touched the territorial water of Pakistan by or before 29-10-1995. Apart from this, the petitioner who have executed contract or opened L. Cs. Prior to promulgation of impugned notification would not be benefited for the reasons stated above as such they have to pay the regulatory duty in the terms prescribed therein.
In case of exemption granting notification if the same are holding the field then in that eventuality the regulatory duty cannot be claimed from them as it would amount to giving the benefit by on hand taking away by another. There was no bar for the Federal Government to exercise its power as envisaged under section 31-A of the Customs Act. It could have withdrawn the exemption so granted. The respondents deliberately have not exercised that power as such the benefit granted under exemption granting notification cannot be denied to the petitioners irrespective of the fact whether the exemption so granted was in toto or to a certain percentage.
For what has been stated above we hold that the Federal Government is fully competent to impose regulatory duty subject to the inbuilt conditions of section 18(2) of the Customs Act, 1969 as elaborated in the preceding paragraphs. Resultantly in case of regulatory duty, it is held that the impugned Notification No. 1050(1)/95, dated 29-10-1995 would not be applicable in those cases where the goods as earlier discussed have been imported into Pakistan. However, mere opening of the L.Cs. or the conclusion of the contracts as argued by the learned counsel would not exempt the petitioners from the payment of regulatory duty in view of the powers conferred under section 31-A of the Customs Act, 1969. In case of exemption granting notifications if the same are still holding the field as already stated the regulatory duty in those cases cannot be claimed. This exemption/benefit would remain in field till the express rescission of the exemption granting S.R.Os./Notifications.
As far as the withdrawal of exemption in the payment of sales tax through impugned notifications is concerned, the vested right accrued to the petitioners in that regard cannot be interfered with by executive action retrospectively, mainly for the reasons that there is no parallel provisions in the Sales Tax Act like that of section 31-A of the Customs Act. It has been held in Al-Samrez Enterprises v. Federation of Pakistan 1986 SCMR 1917 that the respective effect cannot be given to executive orders so as to destroy the contractual right and obligation already accrued. In Muhammad Abdullah v. Government of Pakistan through Secretary, etc. PLD 1992 Kar. 266, the learned Judge of a Division Bench of Sindh High Court quoted para 5 of Civil Appeals Nos. 187-K to 191-K of 1990 titled Federation of Pakistan v. M/s. Mehmood Sons (Pvt.) Ltd., which reads as follows:
"As regards the re-imposition of the sales tax and denial of the benefit of the exemption, our decision in al-Samrez Enterprises v. Federation of Pakistan (1986 SCMR 1917) holds the field as by a Notification, the Federal Government could not by withdrawing exemptions, enhance the fiscal liability on concluded contracts evidenced by the opining of the irrevocable letters of credit in favour of the suppliers. Section 31-A of the Customs Act cannot be invoked for protecting the levy of sales tax because that to customs duty and not to Sales tax."
After quoting the same the learned Judges observed as under:---
"As, in the present Constitutional petition, the challenge is to the demand of sales tax and not to customs duty. In view of the aforesaid law declared by the Supreme Court, section 31-A of the Customs Act cannot be pressed into service by the Department for protecting the levy of sales tax by the second Notification dated 26-6-1988 as contracts had already been concluded between the petitioner and the suppliers in respect of the seven consignments in question evidenced by the opening of the Irrevocable Confirmed Letters-of-Credit by the petitioner in favour of the suppliers. The aforesaid two reported decisions of this Court relied upon by Mr. Muhammad Nasim also support the case of the petitioner that the levy of sales tax on the consignments in question is illegal."
Reliance is also placed upon Punjab Steel Ltd. v. Deputy Collector of Customs, Dry Port, Lahore and others PLD 1989 Lah. 237 where it was held as under:
As regards the sales tax, the petitioners are entitled to the exemption, in view of the principle laid down by the Supreme Court in Al-Samrez Enterprises' case 1980 SCMR 1917. Section 31-A of the Customs Act, 1969 doe's not apply here, as sales tax is not covered by this section or sections 30 and 31 of the Customs Act.
A reference may also be made to Messrs Ahmed Investment (Pvt.) v. The Federation of Pakistan and another 1994 PTD 575, where it was held as under:
"It may be pointed out that following the decision in the case of Al- Samrez 1986 SCMR 1917 several petitions were decided by this Court as it had been held that once a vested right was created in favour of the petitioners the same could not be subsequently taken away by withdrawal of a notification. Thereafter, section 31-A was introduced ' in the Customs Act to meet such a situation but admittedly no such corresponding amendment has been made in respect of the sales tax. Since the goods imported by the petitioner had already arrived at the Karachi Port and Bills of Entry had also been presented to the Customs Authorities in respect thereof, therefore, in view of the principle laid down in Al-Samrez s case, the petitioner had acquired a vested right which could not be taken away by subsequently withdrawal. We are consequently of the view that the cases cited by Mr. Amanullah Khan are fully attracted to the present case, so far as withdrawal of exemption from sales is concerned. "
Resultantly, the impugned notification, qua the withdrawal of the exemption in the payment of sales tax cannot be given retrospective effect, and the vested right already accrued cannot be interfered with. Before concluding, we also direct the respondents to refund whatever amount they have received from the petitioners in violation of aforesaid determination. There shall be no order as to costs.
A.A./S-103/LOrder accordingly.