Appeal No.453/LB of 1999, decided on 4th June, 2001. VS Appeal No.453/LB of 1999, decided on 4th June, 2001., 2003 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 220 (2001)

Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 19, 33 & 194‑A‑‑‑S.R.O. 555(I)/98, dated 12‑6‑1998‑‑ S.R.O.24(I)/99, dated 13‑1‑1999‑‑‑Refund of duty, claim for‑‑‑Computer parts imported and charged with duty under S.R.O. 555(I)/98 were subsequently exempted from , duty through S.R.O. 24(I)/99, dated 13‑1‑1999 amending earlier S.R.O. No.555(I)/98‑‑‑Appellants claim for refund of duty was rejected by authority on the ground that amending S.R.O.24(I)/99 extending benefit of exemption had no retrospective effect‑‑‑Validity‑‑‑Amending S.R.O.24(I)/99 was a continuation and amplification of an entry of Finance Act, 1998‑‑‑Such S. R.O. being a subsidiary legislative measure, if was ignored, even then appellants could claim refund under PCT Heading 8473.3020 relating to "parts and accessories of personal computers" incorporated in Finance Act, 1998, the main legislation, which override notification in forms of S.R.Os.‑‑ Omission of parts and accessories of personal computers in S.R.O. 555(I)/98, dated 12‑6‑1998 had not adversely affected refund claim of appellants‑‑‑Tribunal accepted appeal, set aside impugned order and found appellants entitled to claim and to be awarded refund of customs duty and taxes paid by them on import of such parts.

Messrs Techmen Office Automation v. Collector of Customs (sic) fol.

Abid Hussain Qureshi for Appellant.

Saqib Nazir Appraiser for Respondent.

JUDGMENT

ZAFAR‑UL‑MAJEED, MEMBER (TECHNICAL). ‑‑‑This appeal is directed against order in Appeals Nos.350 and 351 of 1999 dated 28‑6‑1999 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals) Central Zone, Lahore, whereby the learned Collector has upheld the order of Assistant Collector of Customs AFU, Lahore rejecting refund claim of Messrs 3N. Traders, Lahore (the appellants herein).

2. Briefly, the facts leading to this appeal are that the appellants imported different computer parts vide Bill of Entry No. 02261 date 7‑8‑1998. The appellants were charged Customs duty on all the parts falling under PCT heading No.84.71 while parts not specified in the aforesaid heading or falling under heading No.84.73 were released against undertaking pending clarification from the C.B.R. Subsequently, the Federal Government, vide Notification NO.S.R.O.24(I)/99, dated 13‑1‑1999 amended its earlier Notification No.S.R.O.555(I)/98 dated 12‑2‑1998 and exempted various parts and accessories of personal computers falling under their respective headings including the parts imported by the appellants on which they had been charged duty. The appellants accordingly claimed refund of duty which was rejected by the Assistant Collector on the ground that the Notification dated 13‑1‑1999 extending benefit of exemption to the parts in question was not given retrospective effect.

3. The appellants' case is that S.R.O. 555(I)/98, dated 12‑6‑1998 which did not specify certain computer parts imported by them as exempt from duty was issued before the budget for the year 1998‑99 was passed by the Parliament. Subsequently, the Government moved certain amendments in the Finance Bill which included addition of various computer parts and accessories in the exempt list. The amendments were adopted by the Parliament as confirmed by the C.B.R. vide its Letter C. No. 1(40)S(CTR)/98 dated 25‑6‑1998 but relevant entry to this effect was not made in the exemption notification dated 12‑6‑1998. Though the Federal Government removed the anomaly late in time vide its notification dated 13‑1‑1999, the appellants were entitled to exemption in view of the law adopted by the Parliament which was effective from 1‑7‑1998 and took precedence over the provisions of the S.R.O. dated 12‑6‑1998. During the course of hearing, the appellants counsel also produced an order of this Tribunal's Karachi Bench whereby the appellant's contention has been upheld in an identical case of Messrs Techmen Office Automation v. Collector of Customs.

4. We have gone through the records of the case and considered the submissions made by both sides. It is admitted that S.R.O. 555(I)/98 dated 12‑6‑1998, as it existed before amendment on 13‑1‑1999, did not provide exemption to the computer parts in question. C.B.R.'s Letter C. No. 1(40)S(CTR)/98 dated 25‑6‑1998 does indicate that an amendment granting exemption to parts of computers, alongwith some other amendments, was moved and adopted in the Finance Bill, 1998 but the same was not notified by the Government to give it legal effect, The Government did subsequently, grant exemption to the parts in question vide amending Notification No.S.R.O.24(I)/99, dated 13‑1‑1999 but the amendment was not given retrospective effect. In the absence of a formal notification issued by the Federal Government (covering the intervening period) under section 19 of the Customs Act, 1969, benefit of exemption from duty cannot be extended to the imports made by appellants simply on the basis of an executive communication of the C.B.R. The arguments advanced by the appellants in this respect are, therefore, devoid of any force.

5. In view of the foregoing discussion, we find that the impugned order is correct in law and on facts. The appeal is accordingly rejected being without merit.

6. This judgment will also apply to Customs Appeal No.454/LB of 1999 filed by the appellants against Collector (Appeals) Central Zone, Lahore's order‑in‑Appeal Nos.350 and 351 of 1999 dated 28‑6‑1999 as it involves identical questions of law and facts.

MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑‑‑ The facts of the case have already been detailed by the learned Member (T) and I, therefore, need not repeat the same. The only question involved in this appeal is as to whether in view of amending S.R.O. 24(I)/99 dated 13‑1‑1999 the appellant is entitled to refund amounting to Rs.35,175 paid by him on account of duty and taxes leviable on the computer parts imported by him.

2. The Karachi Bench while deciding Appeal No.283 of 2000 on 23‑10‑2000 (which has been referred to as a precedent by the appellant and a photocopy of which has already been placed on record) considered the effect of S.R.O. 555(I)/98 dated 12‑6‑1998 and the effect of the amending Notification No.S.R.O. 24(I)/99 dated 13‑1‑1999 and allowed benefit of amending S.R.O. dated 13‑1‑1999 although the bill of entry was filed (sic) 13‑1‑1999, but in the judgment in this appeal recorded by the learned Member (T) which is to cover the other Appeal No.454 of 1999 as well, the learned Member (T) has only made a passing reference to the precedent of the Karachi Bench while incorporating the contentions of the appellant, but has neither considered its effect nor has given any reason for not following the same which prima facie is binding on this Bench unless it is set at naught by decision of the Full Bench of the Tribunal.

3. I agree with the decision of the Karachi Bench. In my opinion the two appeals are to be accepted. However, since we differ, therefore, the record of the two appeals is submitted to the Honourable Chairman for appropriate orders. To be put there on 22‑6‑2001.

JUSTICE (RETD.) ABDUL MAJEED TIWANA, CHAIRMAN/MEMBER JUDICIAL.‑‑‑ To resolve difference of opinion between the learned Members of Lahore Bench II, I shall record my views as a third Member after hearing the parties, to whom notices be issued for 2nd July, 2001.

While deciding Customs Appeal No.453/LB of 1999 and Customs Appeal No.454/LB of 1999 a difference of opinion has arisen between the Member (Judicial) and Member (Technical) of Lahore Bench II of the Tribunal and to resolve it the matter has been referred to me as a third Member for my opinion in order to overcome the impasse by majority decision.

2. Both the appeals mentioned above are directed against the same order, dated 28‑6‑1999, by which the Collector of Customs (Appeals) Central Zone, Lahore, had dismissed two appeals of Messrs 3N. Traders, the appellants herein, against two orders, dated 19‑3‑1999, whereby Assistant Collector, Customs AFU, Lahore had rejected the refund claim of the appellants in respect of various amounts of customs duty and taxes levied on the computer parts imported by them by different bills of entry between 22‑7‑1998 to 8‑12‑1998, including Bill of Entry No.02261, dated 7‑8‑1998, which was specifically mentioned therein.

3. The moot point of determination is whether Notification S.R.O. No.24(I)/99 dated 13‑1‑1999, issued by the Federal Government, which amended Notification S.R.O. 5550)/98, dated 12‑6‑1998, providing for exemption from customs duty and taxes on certain parts of computers, had prospective operation or retrospective effect? Learned Member (Judicial), relying on the precedent of Karachi Bench of this Tribunal in Appeal No.283 of 2000, came to the conclusion that S.R.O. No.24(I)/99 dated 13‑1‑1999, amending the earlier S.R.O. No. 555(I)/98, dated 12‑6‑1998, had amended it retrospectively w.e.f. 12‑6‑1998, providing for exemption of the parts of personal computers and the appellants were entitled to claim refund of the custom duty and taxes paid by them at the time of their import. He, therefore, proposed to accept bye the appeals. Learned Member (Tech.) on the contrary, held that the amending S.R.O. No.24(I)/99 dated 13‑1‑1999 had only prospective effect and the appellants could not claim the refund of custom duty and taxes paid by them on the computer parts imported prior to the issuance of amending S.R.O. because S.R.O. No.555(I)/98, dated 12‑6‑1998, did not provide for exemption of custom duly and taxes on computer parts. He, therefore, proposed to reject both the appeals and to maintain the orders of the lower fora, rejecting the refund claim of the appellants.

4. I, as a third Member, have heard the learned counsel for the appellants and the learned D.R. at some length and perused the record in the light of the law on the subject. Before embarking on the discussion of the issue, it may be pointed out that both the appeals are directed against the same orders of the lower fora though the learned counsel for the appellants has during the course of arguments before me, also referred to the facts of another appeal, considering it as a pending second appeal which is in tact non‑existent in the record of the Tribunal. This aspect has not been noted by the referring Bench and I too have not been able to solve this riddle. In any case, both the appeals in hand are considered as one appeal and, is being disposed of as such.

5. Brief facts of the case are that the appellants had been importing various parts of the personal computers on different dates between 22‑7‑1998 to 8‑12‑1998 as mentioned in the Schedule embodied in the last para of the impugned order in original dated 19‑3‑1999 passed by the learned Assistant Collector, Customs, Lahore, including the parts imported by them vide Bill of Entry No.02261, dated 7‑8‑1999, which stands specifically mentioned in that order and perhaps the only transaction by the learned Collector (Appeals) in his appellate order. The details of those parts are given in the opening paragraph of the order in original. At the time of their import they paid custom duty and taxes on all the parts mentioned under different headings of PCT 84.71 and furnished undertakings in respect of other party not so mentioned or falling under PCT heading 84.73 to pay custom duty and taxes thereon subject to the clarification to be sought from the C.B.R. All this was done under S.R.O. 555(I)/98, dated 12‑6‑1998, issued on the day the Federal Budget was moved before the Parliament. In the Finance Bill so moved in the PCT heading 8471.3020 (at page 208 of PTCL 1998, statute portion) ,"PCs (personal computers) whether or not incorporating multi media kits ... other, presented in the form of system ... 0% ad al. " were mentioned. In the budget speech on the 1998 Federal Budget, the Finance Minister, in para. 76 (at page 173 of PTCL, 1998 journal portion) said "with a view to promoting further use of computers in the country, 10% customs duty presently leviable on personal computers is proposed to be exempted". He, however, said nothing about the parts and components of the computers. Realizing this and other omissions the Central Board C.B.R./Ministry of Finance which was sponsoring the Finance Bill appear to have moved amendments there in during its discussion in the Parliament through some Member. These amendments, as it appears from the Letter of C.B.R. No.C.1(42)S(CTR)/98, dated 25‑6‑1998, were moved in and adopted by the Parliament and they found their way in the Finance Act, 1998, which, inter alia, under PCT heading 8473.3020 added parts and accessories of personal computers ... 0% ad val. "(page 295-296 of PTCL 1998, Book Section). Later, the C.B.R. vide S.R.O. 24(I)/99 dated 13‑1‑1999, thought proper to amplify be said entry of parts and accessories of personal computers and enumerated the same.

6. Thus it will be seen that S.R.O. 24(I)/99 dated 13‑1‑1999 was a continuation and amplification of an entry of the Finance Act, 1998, and did not introduce something altogether new and different. But even if this S.R.O., which is a subsidiary legislative measure be ignored even then the appellants could claim refund under PCT heading 8473.3020 relating to parts and accessories of personal computers incorporated in the Finance Act, 1998, the main legislation which overrides notifications issued in the form of S.R.Os. thus the omission of parts and accessories of personal computers in S.R.O. 555(I)/98, dated 12-6-1998, did not adversely affect the refund claim of the appellants. I therefore agree with the views of learned Member (Judicial) of Lahore Bench-II based on a ruling of the Karachi Bench in appeal No. 283 of 2000 which the learned Member (Technical) of Lahore Bench I erroneously ignored.

(Justice Retd.) Abdul Majeed Tiwana),

Chairman/Member Judicial

Final order of Tribunal

On account of majority view, both the appeals (which is in fact one appeal as already explained) are accepted, the impugned orders of the dower fora are set aside and the appellants are held entitled to claim, and to be awarded, refund of customs duty and taxes paid by them on the sport of various parts and accessories of personal computers, vide Bill of Entry No. 02261, dated 7‑8‑1998 and 17 bills of entry mentioned in the last paragraph of the order in original dated 18/19‑3‑1999.

(Justice Retd.) Abdul Majeed Tiwana),

Chairman/Member Judicial

S. A. K./518/Tax(Trib.) Appeal accepted.