2002 P T D 2478

[Lahore High Court]

Before Muhammad Nawaz Abbasi, J

BESTWAY CEMENT (PVT.) LTD.

versus

FEDERATION OF PAKISTAN

Writ Petition No. 2139 of 1996, decided on 16/08/2001.

(a) Customs Act (IV of 1969)---

----Ss. 202 &.18(1)(2)---Recovery of unpaid amount payable as duty under Customs Act, 1969---Scope---Such amount can be recovered from any money owing to .an importer under the control of Customs Authorities---Bank guarantee furnished by importer for payment of customs duty can be encashed in lieu of customs duty---Payment of customs duty in cash by importer would4mnot debar Customs Authorities to adjust bank guarantee through its encashment towards payment of regulatory duty payable under S. 18(2) of Customs Act, 1969.

(b) Customs Act (IV of 1969)---

----S.18---Protection of Economic Reforms Act (XII of 1992). S.6-- Prot~ectt on provided under S.6 of Protection of Economic Reforms Act, 1992 would neither debar Government from claiming customs duty from importer under Customs Act, 1969 nor preclude Government from levy of customs duty or regulatory duty on goods imported under Customs Act, 1969.

(c) Customs Act (IV of 1969)---

----Ss.18(1)(2) & 19---Sales Tax Act (VII of 1990), S. 13(i) ---Protection of Economic Reforms Act (XII of 1992), S.6---S.R.O. 484(I)/92, dated 14-5-1992---S.R..O. No.569(I)/95, dated 26-6-1995---S. R. O. No.978(I)/95, dated 14-10-1995---Constitution. of Pakistan (1973), Art. 199---Constitutional petition---Exemption from payment of customs duty and sales tax on import of machinery was available to petitioner during the period from 1-12-1990 to 30-6-1995 under S.R.O. No.484(I)/92, dated 14-5-1992 read with S.R.O. No.569(I)/95, dated 26-6-1995---Petitioner established letter of credit on 29-6-1995 and after arrival of goods in December, 1996, opened Bill of Entry---Customs Authorities demanded import duty and regulatory duty on such goods under S.R.O. No.978(I)/95, dated 14-10-1995 while denying the benefit of S.R.O. No.482(I)/92 to petitioner---Validity---Date of filing of Bill of Entry would be considered the date of import of goods for purpose of notification of exemption on payment of customs duty---Petitioner was not entitled to benefit of S.R.O. No.482(I)/92 as he had filed Bill of Entry for release of goods much beyond the target date specified in said notification---Regulatory duty having not been mentioned in S.R.O. No.482(I)/92 was neither exempted nor any such concession was made available through any other notification and same being leviable under S.18(2) of the Customs Act, 1969 independent of customs duty leviable under S.18(1) of the Customs Act, 1969 was chargeable on goods imported during the period when S.R.O. No.482(I)/92 was operative-- Regulatory duty under S. R. O. No.978(I)/95 was recoverable notwithstanding the provisions of S.6 of Protection of Economic Reforms Act, 1992.

Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072; C.P.No.1485 of 2000; Collector of Customs and others v. Ravi Spinning Ltd. and others 1999 SCMR 412; Writ Petition No.505 of 1997; Government of Pakistan v. Fecto Belarus Tractor PTCL 2000 CL 320 and Anoud Power Generation Limited and others v. Federation of Pakistan PLD 2001 SC 340 ref.

Mahmood Akram Shaikh for Petitioner.

Raja Khalid Ismail Abbasi and Karamat Hussain Dy. Supdt. For Respondent.

Date of hearing: 5th July, 2001.

JUDGMENT

The petitioner with a view to instal Cement Plant established in irrevocable Letter of Credit on 29th of June, 1995, for the import of machinery and claim the benefit of S.R.O. No. 484(1)1992 dated 14-5-1992 read with S.R.O. No. 569(I)/95 dated 26-6-1995 for exemption on the payment of customs duty and sales tax. The notifications in question provided that the customs duty and sales tax leviable on the machinery and plants which were not being manufactured locally and were imported during the period from 1st of December, 1990 to 30th of June, 1995, for setting up new Units or for expansion or balancing, modernization and replacement of existing Units situated in the rural areas would be exempted from the payment off customs duty and sales tax. The first consignment of the machinery and equipment imported by the petitioner reached at Karachi Port on 17th of December, 1996, under Bill of Lading, dated 22nd November, 1996, and the remaining shipments of the machinery and equipments established under the Letter of Credit in question arrived at Sea Port at Karachi on 19th, 22nd December, 1996, and 1st of January, 1997. The petitioner on arrival of goods filed Bill of Entry for clearance of consignments at the Dry Port at Rawalpindi, for release of the goods.

2. The grievance of the petitioner is that the respondents without extending the benefit of S.R.O. No.484(I)/92 and S.R.O. No.569(I)/95 directed the petitioner to pay sales tax under S.R.O. No.978(1)95 with 10% regulatory duty and 2% service charges in addition to the payment of 25% import duty and sales tax. The petitioner has challenged the demand of payment of customs duty inter alia on the ground that he having established Letter of Credit within the target date was entitled to the benefit of S.R.O.No.484(I)/92 and S.R.O. No.596(I)/95 and that S.R.O. No.978(I)/95 was not applicable to the goods imported by the petitioner.

3. Learned Federal Counsel/Standing Counsel has submitted that the comments filed on behalf of respondent No.3 may be treated as combined comments on behalf of all the respondents. It has been pleaded in the comments that the S.R.O.No.484(I)/92 dated 14-5-1992 was effective only up till 30th of June, 1995, and that the benefit of said notification was not available to the goods imported after the said date. The importer also did not claim the benefit of said S.R.O. at the time of pre-shipment/inspection/opening of Letter of Credit. In nutshell, the respondents denied the benefit of the S.R.O. to the petitioner on the ground that the exemption was available on the goods imported into Pakistan till 30th of June, 1995, and that the import of the goods subsequent to the Said date would not be entitled to the exemption in question.

4. Pending disposal of this petition, Karamat Hussain, Deputy Superintendent, Customs while appearing before this Court on 4-1-2001 stated that the petitioner has discharged his liability to the extent of customs duty and there was nothing outstanding against him in connection with the customs duty and that the dispute was only confined to the extent of regulatory duty payable by the petitioner. He submitted that the petitioner has paid an amount of Rs.18.05 millions in connection with the regulatory duty and the outstanding amount of Rs.55.84 million in that behalf was still recoverable and that the Department issued notice under section 202 of the Customs Act, 1969, to the petitioner for the recovery of the remaining amount of regulatory duty through encashment of bank guarantee furnished by him for the payment of customs duty. Learned counsel for the petitioner has argued that the customs duty having been paid by the petitioner

in cash, the bank guarantee furnished by him for the payment of the said duty would not be encashable for the payment of regulatory duty. Learned counsel next contended that the respondents without properly determining the liability of the petitioner for the payment of regulatory duty demanded the payment of Rs.66.84 million out of which 25% i.e. 18.05 million was paid by the petitioner as a result of the undertaking given by the respondents that the remaining regulatory duty would not be charged and he would not be asked to make any further payment in this behalf. Learned counsel while placing reliance on 1999 SCMR 1072 and on an unreported judgment in C.P. No.1485 of 2000 raised the following contentions in support of the present petition:--

(a) That the protection made -available under Economic Reforms Act, 1992, cannot be taken away through a notification issued under Customs Act, 1969, and Sales Tax Act, 1990.

(b) That since the regulatory duty was imposed much after the issuance of S.R.O. No.978(I)/95 dated 14-10-1995 and the petitioner opened Letter of Credit within the date specified in S.R.O.No.484(I)/92, dated 14-5-1992, therefore, he was not liable to pay the regulatory duty and that still with a view not to enter into any controversy, the petitioner on the demand of respondents made payment of 25 % regulatory duty on the assurance given to him by the concerned official, that no further amount in connection with the regulatory duty would be payable by him. The learned counsel contended that since the petitioner ,has paid the customs duty in full with 25% regulatory duty; therefore, the respondents were not authorized either to proceed against the petitioner for the recovery of the remaining regulatory duty or encash the bank guarantee furnished by him for the payment of the customs duty.

5. The issue relating to the legality of the imposition of regulatory duty has been settled by the apex Court in Collector of Customs and others v. Ravi Spinning Ltd. and others (1999 SCMR.412) whereas the payment of service charges were declared illegal and not payable, therefore, the same need no discussion. The exemption of customs duty sought under S.R.O. No.484(I)/92 dated 14-5-1992, the payment of regulatory duty under S.R.O. No.978(I)95 dated 14-10-1995 and the question relating to the encashment of bank guarantee provided for the payment of customs duty for realization of the amounts of regulatory duty under section 202 of the Customs Act, 1969, would need consideration.. Section 202 of the Customs Act, 1969, which is read as under:--

"S.202 Recovery of Government Dues.---(1) When under this Act or under any other law for the time being in force, which provides for any tax, duty or other levy being collected in the same manner as customs duties are collected, a penalty is adjudged against, or notice or demand is served upon, any person calling for the payment of any amount unpaid which may be payable by way of penalty or by way of duty, tax or other levy or under any bond (guarantee) or other instrument executed under this Act or such other law or the Rules made thereunder, the appropriate officer-

(a) may deduct or require any other officer or Customs, Central Excise and Sales Tax to deduct such amount from any money, owing to such person which may be under the control of the Customs, Central Excise and Sales Tax Authorities; or

(b) if it cannot be so recovered, may recover or may require any other officer of Customs Central Excise or Sales Tax to recover, such amount by detaining and selling any goods belonging to such person which are under the control of the Customs, Central Excise or Sales Tax Authorities.

(2) If the amount cannot be recovered from such person in the manner provided in subsection (1), the appropriate officer may serve upon the defaulter a notice in the prescribed form requiring hire to pay the amount specified in the notice within such time as may be so specified.

(3) If the amount referred to in the notice under subsection (2) is not paid within the time specified therein or within further time if any allowed by the appropriate officer, the appropriate officer may proceed to recover from the defaulter the said amount by one or more of the following modes namely:--

(a) attached and sale of any movable or immovable property of the defaulter; and

(b) may recover, or may require any other officer of Customs Central Excise or Sales Tax to recover. if it cannot be so recovered, such amount by detaining and selling any goods belonging to such persons which are under the control of the Customs, Central Excise or Sales Tax Authorities; or

(c) may recover such amount by attachment and sales of any movable and immovable property of the guarantor, person, company, Bank or financial Institution, where a guarantor or any other person, company, Bank of financial Institution, fails to make payment under such guarantee, bond or instrument.

(4) For the purpose of recovery of duty, or other levy under [subsections (1) and (3)], the appropriate officer shall have the same powers which, under the Code of Civil Procedure, 1908 (V of 1908), a Civil Court has for the purpose of the recovery of an amount due under the decree.

(5) The Central Board of Revenue may make Rules regulating the procedure for recovery of duty, tax or other levy under this section and any other matter connected with or incidental to the operation of this section." .

6. The above provisions of law empowers the authorities in the Customs Department, for recovery of any amount payable by way of customs duty to adjust any amount owing to a person under the control of Customs Authorities in the manner provided in the said section. Therefore, the contention of the learned counsel for the petitioner that the Bank-guarantee would not be encashable for the adjustment of its amount towards the regulatory duty was without any substance. The following two points need determination for disposal of this petition:--

(a) Whether the petitioner was not liable to pay regulatory duty under-S.R.O. No.978(I)/95 and was entitled to the exemption of customs and regulatory duty under S.R.O.No.484(I)/92, dated 14-5-1992.

(b) Which would be the target date of import under the notification in question, whether opening of irrevocable Letter of Credit or the date of filing of Bill of Entry?

7. For the purpose of availing the exemption in the customs dutyunder First Schedule to the Customs Act, 1969, as well as the Sales Tax Act, 1990, under the notification in question the import of goods was to be made during the period commencing from 1st December, 1990, and ending on 30th of June, 1995, subject to the fulfilment of the conditions contained in the notification of import of the machinery for a Project specified therein. The importer would also furnish indemnity bond to discharge his liability under the notification.

8. S.R.O. No.569(I)/95 dated 26th June, 1995, relating to the exemption on the sales tax, being not under dispute would need no comments.

9. S.R.O. No.978(I)/95, dated 14th of October, 1995, issued under section 19 of the Customs Act, 1969, and section 13(i) of the Sales Tax Act, 1990, contained concession of customs duty and sales tax in excess of 25 % of said duty and tax leviable on the Plant and the machinery which were not being manufactured locally and were used for expansion or balancing, modernization and replacement of existing units, and the concession was made available only, to the import of these goods in which the Letter of Credit was opened prior to 30th of June, 1995, and the Bill of Entry was filed under Notification S.R.O. No.484(I)/92, dated 4-5-1992, with fulfilment of the conditions contained therein before the target date.

10. The customs duty is leviable under section 18(1) of the Customs Act, 1969, whereas the regulatory duty which is also a customs duty is charged under section 18(2) of the said Act. The apex Court in Collector of Customs and others v. Ravi Spinning Ltd. and others (1999 SCMR 412) held that generally speaking tire regulatory duty is also a sort of customs duty which is leviable under section 18(1) of the Customs Act, 1969, independently to the customs duty leviable under section 18(2) of the said Act. Both the customs duty and the regulatory duty are similar nature in the Customs Act, 1969, still the same being leviable independently under sections 18(1) and 18(2) of the Customs Act, 1969, would not be mixed together for the purpose of S.R.O. under discussion and the exemption to the extent of customs duty was made available without any reference to the regulatory duty, therefore, without specific mention of regulatory duty in the notification, it would not be automatically covered by the notifications of exemption of customs duty. The exemption of the regulatory duty is not specifically given cannot be, claimed in the general terms.

11. The precise contention of the learned counsel for the petitioner was that since the petitioner established the Unit without getting the benefit of foreign exchange from the Government, therefore, he would be entitled to the benefits available under the Economic Reforms Act. 1992, and that the notifications either under the Customs Act, 1969, or the Sales Tax Act, 1990, would not take away the said benefit and thus the demand of the payment of regulatory duty under Customs Act, 1969, was in violation of the Economic Reforms Act, 1992.

12. The petitioner has claimed the benefit of the exemption of customs duty and regulatory duty on the import of goods under the notification issued under the Customs Act, 1969, therefore, notwithstanding the arrangement of the foreign exchange through his own source, the exemption on payment of duties under the above said notification would only be available subject to the fulfilment of the conditions contained therein. This is noticeable that none of the notifications referred to above provided that in case of arrangement of foreign exchange by a person through his own source, the provisions of Customs Act, 1969, would not be applicable to such person. The exemption in question having been made under the Customs Act, 1969, and Sales Tax Act, 1990, would be regulated by the terms of the notifications issued under said Acts and consequently the Economic Reforms Act, 1992, would not affect the Customs Act, 1969, and Sales Tax Act, 1990. Thus only point for determination would be whether the date of opening of Letter of Credit would be deemed to be the date ofimport of goods or the date of filing of Bill of Entry of the goods wouldbe the date of import of goods.

13. Similar question was raised in the Power Project Cases which were decided by this Court vide judgment, dated 31-7-2000 in Writ Petition No.505 of 1997. The conclusion drawn in the above said case was as under:--

"Since the condition of execution of power purchase agreement by the importers of equipment and machinery for power generation projects was not made part of the. Notification S. R. O. No..2'7,9(I)/94 dated 2-4-1994, therefore, 4he exemption from payment of customs duty, sales tax, regulatory duty and Iqra charges subject to the fulfilment of the conditions contained in the above notification would be available to all those importers of machinery and equipment for power Plant under the power policy of Government, who have filed bill of entry or opened the letter of credit before 1-7-1995 on which date an amendment in S.R.O. No.279(I)/94, dated 2-4-1994 was made through Notification S.R.O. No.584(I)95 dated 1-7-1995 without any discrimination as the amending notification would not be operated retrospectively. Thus, the exemptions allowed under Notification S.R.O. No.279(I)/94, dated 2-4-1994 would be available to all such importers till 1-7-1995 without any discrimination and after the amendment the said notification in its amended form would take effect from the date of its amendment: The apex Court in M.Y. Electronics Industries (Pvt.), Ltd. through Manager and others v. Government of Pakistan through Secretary Finance, Islamabad and others (1998 SCMR 1404) held as under:--

`The effect of insertion of section 31-A of the Act is that when exemption from payment of customs duty granted by the Government under section 19 of the Act is withdrawn, then notwithstanding the fact that while exemption was enforced. the party had opened a Letter of Credit or concluded the contract with the foreign suppliers, the amount of customs duty payable on the goods will be that which may have become payable as a result of withdrawal of the exemption. It is, therefore, quite clear that the right to claim exemption from customs duty under a notification issued under section 19 of the Act remains available to a party only as long as the exemption notification holds the field. However, as soon as the exemption notification is withdrawn, the payment of customs duty on the imported articles is to be determined in accordance with the provisions of section 30 of the Act. The contention of the appellants that section 31 was inserted in the Act with the sole object of doing away with the effect of the judgment of this Court in Al -Samrez's case and, therefore, the exemptions granted by the Government after insertion of section 31-A are not controlled by the section 31-A does not appear to be correct. Section 31-A was inserted in the Act by section 5(2) of Finance Ordinance II of 1988 which provided that `section 31-A shall be deemed always to have been so inserted in the Act, meaning thereby that it was given retrospective effect from the date of Customs Act, 1969, came to effect. There is nothing in the language of section 31-A (ibid), to justify the interpretation that this section applied only to the cases covered by the judgment of this court in Al- Samrez's case or to those cases only, which did not acquire the character of past and closed transactions on the date of insertion of section 31-A in the Act. The language of section 31-A (ibid) is wide enough to include within its ambit all those cases where exemptions have been withdrawn after the insertion of section 31-A in the Act as well.

At this stage, we , may also dispose of another connected argument of Mr. Aitzaz Ahsan relating to interpretation of section 31-A. Mr. Aitzaz Ahsan contended `surcharge' and `Iqra surcharge' were levied under section 2 of the Finance Ordinance, 1982, and section `5' of the Finance Act, 1985, respectively. Section 31-A as originally enacted amongst other provided that the rate of duty applicable to any goods shall also include the amount of .duty- imposed under section 2 of the Finance Ordinance, 1982, and section 5 of Finance Act, 1985. However, by section 2(4) of the Finance Act, 1991, the word `section 2 of Finance Ordinance (XI of 1982). and section 5 of the Finance Act, 1985 (I of 1985) and the anti-dumpting or countervailing duty imposed. under the Import of Goods (Anti dumpting and Countervailing Duties Ordinance, 1983, (III of 1983)' appearing in section 31-A were omitted, with the result the withdrawal of Surcharge and Iqra Surcharge through the impugned notifications could not be defended on the strength of section 31-A of the Act. In reply to the above arguments of Mr. Aitzaz Ahsan, Mr. S.M. Zafar, the learned counsel for the respondents contended that on the date, the two notifications withdrawing the exemptions from payment of Surcharge and Iqra Surcharge were issued by the Government. The words "Section 2 of the Finance Ordinance, 1982, and section 5 of the Finance Act, 1985' were very much part of section 31-A of the Act and as such the withdrawal of `Surcharge and Iqra Surcharge' were fully covered and protected by section 31-A of the Act. The contention of Mr. S.M. Zafar appears to be well founded. The notifications `withdrawing the exemption of Surcharge and Iqra Surcharge were issued by the Government on 9th of May, 1991, while the Finance Act, 1991, received the assent of the President of Pakistan on 20-6-1991 and it was published in the Gazette of Pakistan, Extraordinary, Part I of 27-6-1991. Therefore, on the date the notifications withdrawing the exemptions from payment of `Surcharge' and `Iqra Surcharge' were issued, section 31-A also covered the cases of withdrawal of exemptions from payment of Surcharge and in Iqra Surcharge. We, therefore, find no force in the above submissions of learned counsel for the appellants. .

The next contention of the appellants in these appeals is that the observations of the High. Court in the impugned judgment fully established the allegations of the appellants that the Government held out promises and inducements to the Industrialist by offering them exemptions from payment of various duties and taxes in case they established Industries in the under-developed area of GAIE. The appellants having acted on the inducements offered by the Government invested huge amounts in establishing various Industrial Units In GAIE. It is accordingly contended that in these circumstances, the Government could not be allowed to withdraw these exemptions on the principle of promissory estoppel.

The doctrine of promissory estoppel is founded on equity. It arises when a person acting on the representation by the Government or a person competent to represent on behalf of the Government changes his position to his detriment, takes a decisive step, enters into a binding contract or incur a liability. In such case, the Government will not be allowed to withdraw from its promise or representation. However, a general promise without any time limitation cannot bind the Government for all times to come. The enforcement of doctrine of promissory estoppel against the Government or a Government functionary competent to represent on behalf of the Government is, however, subject to the following limitations as held .by this Court in the case of Army Welfare Sugar Mills Limited v. Federation of Pakistan (1992 SCMR 1652):--

`(i) The doctrine of promissory estoppel cannot be invoked against the legislature or the laws framed by it because the legislature cannot make a representation;

(ii) promissory estoppel cannot be invoked for directing the doing of thing which was against the law when the representation was made or the promise held out;

(iii) no agency or authority can be held bound by a promise or representation not lawfully extended or given;

(iv) the doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducements so as to irrevocably commit the property or the reputation of the party invoking it; and

(v) the party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise.'

In. the cases before us, the appellants are invoking the doctrine of promissory estoppel against the Government on the basis of alleged inducements and representations contained in the exemption Notification No.517(I)/89 dated 3-6-1989, No.480(I)/88 dated 26-6-1988 and 481(I)/88 dated 26-6-1988. These notifications do not contain any time limitation during which these exemptions were to remain operative. The appellants have failed to bring on record any material to establish that the Government either before or after issuance of these notifications made any representation to the Industries in GAIE that these exemptions will remain operative for any specified period. In the absence of period having been specified in these notifications regarding their validity, the exemptions under these notifications could be availed by the appellants only during the period these notifications were operative. These exemptions ceased to be available from the date the above notifications were superceded or withdrawn. The learned counsel for the appellants have, however, argued that as no time limit was mentioned in the above notifications, they were entitled to reasonable notice by the Government before withdrawal of these exemptions. In support of their contention, they have relied on the case of Gadoon Textile Mills v. WAPDA (1997 SCMR 641)."

In addition to the grievance of the petitioners relating to the changes made in the exemption of customs and sales tax, they have also challenged the levy of regulatory duty under section 18(2) of the Customs Act, 1969, as well as constitutionality of sections 31-A and 18-B of the Customs Act, 1969, and section. 3(1)(a)(b) of the Sales Tax Act, 1990. The apex Court subject to the limitations contained in section 18(3) and (4) of the Customs Act, 1969, declared the provision of section 18(2) of the ibid. Act valid and held that the regulatory duty would remain enforce from the date of publication of notification till the end of financial year in which it is issued. The regulatory duty being transitory in nature is always imposed subject to the limitations contained in section 18(2)(3)(4) of the Customs Act, 1969, and also the existence of condition essential for such levy: The Government being entitled to exercise the discretion of levying the regulatory duty can continue the imposition of said duty through a fresh notification on the expiry of earlier notification if such condition still exist. Thus the exemption from the payment of customs duty would not by itself exempt the payment of regulatory, duty unless it is specifically provided through a notification under section 19 of the Customs Act, 1969, and such notification cannot ipso facto apply to the duty not already enforced. However, an exemption notification in addition to its application to the existing charge of customs duty can also cover future levy of such duty if it is so provided in the notification. The customs duty is. levied under section 18(1) of the Customs Act, 1969, whereas the regulatory duty is imposed under section 18(2) of the said Act and, therefore, in absence of specific mention of regulatory duty in an exemption notification issued under section 19 of the Customs Act, 1969, the customs duty would no include the regulatory duty leviable under section 18(2) of the Customs Act, 1969. The exemption in general terms under section 19 would only apply to the customs duty leviable under section, 18(1) of the Customs Acts, 1969, unless exemption from the regulatory duty is specifically mentioned in the said notification. In nutshell, the exemption from the regulatory duty cannot be claimed in general under a notification given such exemption beyond the financial year, during which it is enforced.

The next question relates to the withdrawal of exemption in the payment of sales tax through Notification S.R.O. No.426(I)/96 dated 13-6-1996. The notification through the exemption is granted remains operative so long it exists and in case the exemption is withdrawn, the notification of withdrawal of exemption being prospective in its operation would not operate retrospectively and the exemption already made through and earlier notification would remain available till the time, the same is not taken away. Consequently, the exemption in the sales tax given through Notification S.R.O. No.279(I)/94 would be given to the petitioner indiscriminately till the same was not withdrawn through a subsequent notification and thus the exemption in payment of sales tax on the import of machinery and equipment which were imported within the target date would be available under S.R.O. No.279(I)/94 dated 2-4-1994 and would continue till the issuance of notification of withdrawal, The notification through which the exemptions were allowed was neither issued for a specific time nor the power of the Government to withdraw the benefits given under the said notification was restricted by any condition and, therefore, the consignment relating to the contact already entered into for the import of machinery and equipment of power generation Projects, .in which the Letters of Credit were established before the target date would be unconditionally entitled to avail the exemption from the payment of sales tax under S.R.O. No.279(I)/94.

The apex Court in 1998 SCMR 1404 at page 1441 further held as under:--

"The next question which arises 'for consideration in this behalf, what is the fact of notification dated 9-5-1991 on the vested rights which the appellants acquired under notification dated 3-6-1989 with regard to the exemption from payment of sales tax on raw material and components imported for exclusively manufacturer of goods by recognized industrial units located in GAIE. We have already held that the notification dated 4-6-1989 issued by the Government was not time bound. It is, therefore, quite clear that the exemption from payment of sales tax under the notification dated 3-6-1989 was available till such time the notification was withdrawn by the Government The withdrawal of notification is dated 9-5-1991. Therefore, the withdrawal of exemptions from payment of sales tax would be applicable only from 9-5-1991. This withdrawal, however, did not effect the rights of the appellants to claim exemptions from payment of sales tax in respect of import of raw material and components for which contracts were already entered into and letters of credit were established in favour of foreign suppliers before the date of withdrawal of notification. The notification issued on 9-5-1991 withdrawing the exemption, however, itself provides that the notification will not affected the raw material and components imported against irrevocable Letters of Credit opened on or before 8-5-1991. The power to issue a notification included the power to withdraw the said notification and exercise of this power by the Government is unconditional as held by this Court in Aziz Ullah Industries Ltd.'s case, (supra). Therefore, to the extent of exercise of that power by the Government; no exemption could be taken. The learned counsel for the appellants has, however, contended that as the appellants have made huge investments in the industries on the representation of the Government, the Government could not withdraw the exemption from payment of sales tax abruptly. In our view, the contention of the learned counsel for the appellants cannot succeed for the reasons that the notification dated 5-6-1989 issued by the Government granting exemption from payment of sales tax was not for any specific period. In the absence of the period having been specified in the above notification, the power of the Government to withdraw the notification was not circumscribed by any other condition. In these circumstances, the effect of withdrawal of the exemption granted by the Government would be that all contracts entered into for import of raw material and components before the date of withdrawal of the exemption and all those consignments in respect whereof irrevocable Letters of Credit were established before the date of withdrawal of the notification would continue to enjoy exemption from payment of sales tax. Beyond that the appellants will not be entitled to any further concession in respect of exemption from payment of sales tax .

In the light of the legal position as discussed above notwithstanding the execution of power purchase agreement with WAPDA and KESC or Government, as the .case may, the machinery and the powers Plants imported under the Power Policy within the target date would be entitled to all exemptions made under S.R.O.279(I)/94 dated 2-4-1994 indiscriminately till the withdrawal of the said exemptions. This is settled principle that a notification, which purports to impair an existing right or imposes new liability or an obligation cannot operate retrospectively, whereas the notification which confers benefits can operate retrospectively but no one can claim exemption from the payment of customs duty, sales tax or any other tax as of right without legal sanction as the grant of exemption being discretionary, the authority which enjoys the power to grant exemption is also empowered to withdraw such exemption subject to the condition that the exemption, if already allowed would not be withdrawn from the previous date. This general principle is always subject to the exception that if the exemption was granted subject to the existence of certain conditions and withdrawal of exemption was also made conditional, the Government while fulfilling such condition would be justified in withdrawing the exemption and thus no estoppel can be pleaded against the law or the Legislative power of the Government for the grant of exemption or withdrawal thereof. The apex Court in Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others (1992 SCMR 1652) held as under:--

"It may be mentioned that by now, it is well-settled preposition of law obtaining in Pakistan that if an exemption from payment of excise duty or any other tax, has been granted for a specified periods on certain conditions and if a person fulfils those conditions, he acquires a vested right, he cannot be denied the exemption before the expiry of the specified period, through an executive instrument like a notification, but he can be denied his vested right by a legislative provision, like section 31-A, which has been incorporated in the Customs Act in 1988 nullifying the effect of the judgment of this Court in the case of Al-Shamrez Enterprises (supra) as has been held by the author of the above judgment, Zafar Hussain Mirza, J., in the recent unreported majority judgment dated 24th September, 1991, in Civil Appeals Nos.915-K to 918-K of all the 1990 (Molasses Trading and Export (Pvt.).Ltd. v. Federation of Pakistan and other

It is, therefore, evident that the doctrine of promissory estoppel is available in Pakistan against the Government and its functionaries, subject to inter alia limitations highlighted by one of us, Shafiur Rahman, J., in the case of Pakistan v. Salahuddin (supra). However, if the appellants had passed on the additional burden of the excise duty after the two impugned S.R.Os. were issued, they are not entitled to press into service the doctrine of promissory estoppel and it will be inequitable to deny the State excise duty on the excess quantity of sugar referred to herein above, in terms of section 3-C of the Act. We may observe that doctrine promissory estoppel has been evolved by the Courts as an equitable doctrine with the object to pre-empt suffering of any loss by a promise and was not designed or intended to provide a windfall profit to him, though Bhagwati, J., in the case of Moti Lal Padampat Sugar Mills (supra) had held that it was not necessary in order to attract applicability of doctrine of promissory estoppel, that the promises, acting in reliance on the promise should suffer any detriment, but this view was contrary to the Indian Supreme Court's earlier view and also to the subsequent view taken by Bhagwati, as C .J., in the case of Union of India v. Dodfrey Philips India Ltd. (supra)."

The judicial interference into the functions of legislation of the representative body or the Government, as the case may be, ordinarily is not proper but at the same time, Legislature is presumed not to legislate a law manifestly causing injustice or abuses of the jurisdiction of legislation, therefore, in such circumstances, the Courts have the exclusive powers to examine the validity of such exercise of jurisdiction."

14. The controversy relating to the date of the import of the goods for the purpose of payment of customs duty and the sales tax would be resolved in the light of the verdict given by the apex Court in Collector of Customs v. Ravi Spinning Mills (1999 SCMR 412) as under:--

"Even if it is assumed that chargeability to the customs duty arises under section 18 of the Act as soon as the goods enter the territorial waters of Pakistan, the rates of customs duty of all items are prescribed in the first and second schedules to the Act, and, therefore if the imported goods are one of those mentioned in the first or the second schedule, the chargeability arises immediately the goods enter the territorial waters of Pakistan according to the rates prescribed in the Schedule to the Act. The chargeability to the duty having arisen any change in the rate of the customs duty or imposition of any additional duty of customs is to be determined with reference to the dates of filing of Bill of Entry for whom consumption or taking out of the goods from bonded warehouses as provided in section 30 of the Act. Under section 30 of the Act, the rate of duty applicable to any imported goods is the duty which is applicable on the date of filing of Bill of Entry for whom consumption under section 79 of the Act and in the case of goods cleared from bonded warehouse on the date the goods are ex-bonded from the warehouse".

Section 6, (ibid), is to be read with Schedule to Act XII of 1992 which mentions Notification NO.S.R.O. 1284(I)/90 dated 13-12-1990 issued under section 19 of the Act. It is true that Act XII of 1992 was given overriding effect over all other existing laws including Customs Act and section 6 (ibid), provided that fiscal incentives given to the Investors by way of Notification No.S.R.O. 1284(I)/90 dated 13-12-1990 could not be withdrawn or ordered to the disadvantage of the Investors during the period specified therein. However; this provision did not curtail or take away the powers of Federal Government vested under section 18(2) of the Act. The Act that the Government could not withdraw the concession allowed by it under the abovementioned S.R.O. dated 13-10-1990 during the period specified in the notification, did not mean that the Government was precluded from exercising the powers under other laws which allowed discretion to the Government to impose additional duties of customs. In our view, the provisions of section 6 of the Act XII of 1992 places no embargo on the exercise of delegated powers by the Government under section 18(2) of the Act, we, accordingly, hold that in respect of the goods which were exempted from payment of customs duty specified in the First Schedule to the Act either wholly or partially, under all S.R.Os. mentioned above, except S.R.O. 108(I)/95 dated 12-2-1995, the imposition of regulatory duty by the Government under section 18(2) of the Act was effective and the same could be recovered from the Importers at the time of filing of the Bill of Entry for consumption of on the date of ex-bonding of the goods from the bonded warehouse, if the notification imposing regulatory duty had come into effect on the date of presentation of the Bill of Entry of ex-bonding of the consignment from the bonded warehouses.

The apex Court further in Gatron (Industries) Limited v. Government of Pakistan and others (1999 SCMR 1072) held asunder:--

"A bare perusal of section 6 of the Act (XII of 1992) shows that fiscal incentives for investment provided by the Government to the statutory orders listed in the Schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the. disadvantage of the Investors. Notification No.S.R.O. 1284(I)/90, dated 13-12-1990 is mentioned at serial No.2 of the Schedule. Clearly there was statutory commitment to the beneficiaries of the said Notification. The effect of the said notification was that on satisfaction of certain conditions laid down therein, exemption from whole of the customs duty was to be enjoyed by a certain category of approved industrial estate mentioned in the Schedule appended thereto. The Executive Authority of the Federation in the exercise of its delegated power under section 19 of the Cutoms Act, 1969, could not withdraw the exemption to the disadvantages of the beneficiaries. The context, and the impact of section 6 of the Act is clear enough and suffers from no ambiguity: The exemption granted under notification dated 13-12-1990 (supra) cannot be altered to the disadvantage of the appellant who fulfils all the conditions under the said notification."

The apex Court in Government of Pakistan v.. Fecto Belarus Tractor (2000 SCMR 112) observed as under:--

"No general protection appears to have been intended to be provided to any importer of finished Industrial Products by sections 6 and 10 of the Economic Reforms Act, 1992 (XII of 1992).

Even if a contract has been entered into by a party upon exemption granted under section 19 of the Cutoms Act, 1969, no vested right would be created so as to deprive the competent Authority from rescinding such exemption."

In Anoud Power Generation Limited and others v. Federation of Pakistan (PLD 2001 SC 340), it was held by the apex. Court as under:-

"Fiscal notification.--Jurisdiction of Government---Government/ Competent Authority can issue, rescined or amend any notification or legislation which may be less favourbale to a party who has not availed the benefits arising out of the earlier notification or legislation for the purpose of generating funds to run the functionaries of Government etc."

15. In the light of above discussion, it can safely be held that the date of filing of Bill of Entry would be considered the date of import for the purpose of the notification of exemption on the payment of customs duty. The regulatory duty being not mentioned in the said notification was neither exempted nor any such concession was made through any other notification, and the same being leviable section 18(2) of the Cutoms Act, 1969, independent to the customs duty leviable under section 18(1) of the said Act was chargeable on the goods imported during the period during which the notification under discussion was operative.

16. The examination of section 202 of the Customs Act, 1969, would show that the :mount payable by way of duty under the ibid Act which is unpaid can be recovered from any money owning to an importer under the control of the Customs Authorities, therefore, the contention of the learned counsel for the petitioner that the amount of bank guarantee furnished by him for the payment of the customs duty was not adjustable for payment of regulatory duty was without any force. The Bank guarantee furnished by the petitioner for the payment of customs duty, was liable to be encashed by the Department in lieu of the customs duty and on payment of customs duty in cash, the Department was not debarred under law to adjust the amount of said bank guarantee through its encashment for the payment of regulatory duty payable by the petitioner under section 18(2) of the Cutoms Act, 1969.

17. The protection provided under section 6 of the Economic Reforms Act, 1992, would neither debar the Government from claiming duty from the importer under the Customs Act, 1969, nor preclude the Government from the levy of customs duty or regulatory duty, as the case may be on the goods being imported under the Customs Act, 1969.

18. As a consequence to the above discussion, I hold as under:--

(a) the petitioner was not entitled to the benefit of S.R.O. No.484(I)/92 dated 14-5-1992 relating to the exemption on the customs duty as he filed the Bill of Entry for clearance of goods much beyond the target date specified in the notification.

(b) Notwithstanding the provisions of section 6 of the Economic Reforms Act, 1992, the regulatory duty under S.R.O. No.978(I)/95 dated 14-10-1995 was recoverable.

(c) The Customs Authorities in exercise of the power under section 202 of the Customs Act, 1969, were entitled to adjust the amount of bank guarantee towards the amount of regulatory duty recoverable from the petitioner.

In the light of above conclusion, this petition is disposed of with no order as to costs.

S.A.K./B-80/L

Order accordingly.