FATIMA ENTERPRISES LTD. VS FEDERATION OF PAKISTAN, 2003 PTD-KARACHI-HIGH-COURT-SINDH 2791 (2003)

Customs Act (IV of 1969)‑‑‑‑

‑‑‑‑S. 156(24)‑‑‑Constitution of Pakistan (1973), Art. 199---Constitutional petition‑‑‑Levy of customs duty‑‑‑Measurement of commodity in land/shore tank at the port of discharge‑ the petitioner and Customs Authorities was with regard to quantity of palm oil imported Petitioner claimed that the oil received by it was less than the quantity imported while the Authorities imposed the duty on the basis of quantity of oil present on board the raised by the petitioner was that the quantity to be taken for levying the customs duty was the quantity discharged in land/shore I, Customs Authorities had taken quantity found in the tanks on vessel‑‑‑Validity‑‑‑No provision of law existed which barred measurement of liquid commodity in land/shore tank at the port of discharge‑‑‑Measurement of liquid in tank on board the be taken as final‑‑‑Measurement of liquid at a place other then the ship was not barred under the provisions of S.156(24) of Customs Act, 1969, provided such measurement was made in presence of all the concernedparties‑‑‑Effective quantity of oil for the purpose of levy of custom duty would be the quantity of off discharged in the land/shore tanks at the port‑‑‑Levy of customs duty by the Authorities as per quantity found in the tank on board the vessel at the port of destination was neither in accordance with law nor inconformity with established practice relating to the discharge of liquid consignment High Court directedthe Authorities to decide the question of refund the excess customs duty as claimed by the petitioner‑‑‑Petition was allowed accordingly.

Amoco Oil Co. v. Parpada Shipping Co. Ltd. (1989) 1 Lloyd's Law Rep. 369; Trading Corporation of Pakistan v. Inter‑continental Oceanic Enterprises Corporation and 2 others 2000 CLC 1892 and Bruusgaard Kiosteruds Dampskibs Aktieselskab v. Secretary of State AIR 1940 Bom, 294 ref.

Mazhar Lari for Petitioner.

Sajjad Ali Shah, D.A.‑G. for Respondents.

Date of hearing: 27th May, 2003.

JUDGMENT

SAIYED SAEED ASHHAD, C.J.‑‑‑In this Constitutional petition, the petitioner has sought the following reliefs‑

(1)hold and declare that letter, dated 7‑3‑1992 is illegal, void and without lawful authority and custom duty is to be charged on the basis of actual quantity received in the shore/land tanks.

(2)pass an order restraining the respondents from charging custom duty on the basis of on board survey on the consignment of RBD Palm Oil covered under ex‑bond Bill of Entry Machine No.03124. Index No. 14, I.G.M. No.2312 of 1994 and directing them to release the 10% detained cargo.

(3)pass an order of refund of custom duty amounting to Rs.18,481.00 being the difference in the manifested/Bill of Lading quantity and the quantity receive in the land/shore tanks.

(4)grant any other or better relief which may be deemed suitable and proper by this Hon'ble Court 'in the facts and circumstances of the case.

(5)Award costs of the petition.

The facts in brief as stated by the petitioner in the memo of petition are that the petitioner placed an order for the import of 1000,000 M/Tons RBD Palm Oil from Malaysia for which Letter of Credit No. 94/044/MCBM/0248, dated 23‑10‑1994 was opened through Messrs Allied Bank of Pakistan, Ltd., Multan Cantt. Branch, in favour of suppliers/shippers Messrs. Josvina Sendirian Berhad, Malaysia. In pursuance of the said Letter of Credit Messrs Josvina Sendirian Berhad shipped consignment of 17.792.570 M/tons RBD Palm Oil on board the vessel M.T. "Lady Helene" out of which the petitioner's share of the RBD Palm Oil was 990.000 M/Tons under Bill of Lading No.BLWN/KAR‑14, dated 13‑12‑1994 for which a sum of US$ 6,38,550.00 was paid by the petitioner. The said tanker M.T. "Lady Helene" arrived at the port of Karachi on 28‑12‑1994 and discharged RBD Palm Oil from tank in the presence of Surveyors, Customs Authorities, KPT staff and the Chief Officer of tanker from the tank on board to shore tank. On completion of the discharge operation 17,753.947 M/Tons of RBD Palm Oil was found to have been discharged as against manifested quantity of 17,792.57 M/Tons resulting in a shortage of 38,623, M/Tons of RBD Palm Oil, which in terms of the quantity of RBD Palm Oil of the petitioner came to 2.149 M/Tons. However, after completing all the formalities and making payment of all the duties and taxes the petitioner was denied delivery of 10% of the RBD Palm Oil on the ground that the same was in excess by 12.375 M/Tons on which an amount of Rs.1,06,425.00 was payable as duty. The petitioner informed the respondents that the petitioner's consignment of RBD Palm Oil had short landed by 2.149 M/tons and he was entitled to refund of customs duty amounting to Rs.18,481.00 but the respondents rejected the version of the petitioner. The petitioners in their memo of petition produced the following reading in respect of the quantity of RBD Palm Oil which taken at various stages:

1.17,792,570 M/Tons.quantity found in the land tanks

at the port of loading on whose

basis B/L was issued.

2.18,031.404 M/Tons.quantity found on board the

vessel at the port of loading

3.18,005,411 M/Tons.quantity found on board the

vessel at the port of discharge

(Karachi).

4.17,753.947 M/Tons.quantity found after discharged

in the land tanks at Karachi.

It was further submitted on behalf of the petitioner that the actual quantity to be taken in this case was 17.753.947 M/tons which was the quantity discharged in the land tanks from the vessel M.T. "Lady Helene" which reflected short landing of 38.623 M/Tons and further that this reading was to be taken into account for the purpose of determining the quantity of RBD Palm Oil irrespective of the fact that at earlier stages the quantity was found to be in excess of 17,753.947 M/Tons. However, not being able to get any redress from the respondents, the petitioner had no option but to approach this Court by way of this Constitutional petition.

We have heard the arguments of Mr. Mazhar Lari, Advocate for the petitioner and Mr. Sajjad Ali Shah, the learned Standing counsel on behalf of the respondents and have also perused the material on record.

The various quantities of RBD Palm Oil which were found in the land tanks at the port of loading on which basis Bill of Lading was issued: which was found in the tanks on board the vessel M.T. "Lady Helene" at the port of loading: which was found on board in the tank of the vessel at the port of discharge; and the actual quantity found in the land/shore tanks after its discharge from the vessel at Karachi have already been mentioned hereinabove.

Mr. Mazhar Lari submitted that the quantity which was to be taken into account for levying the customs duty was the quantity discharged in the land/shore tanks at Karachi. He further submitted that the respondents claim that the quantity found in the tanks on board the vessel at the port of discharge was the relevant quantity was not only against the accepted principles relating to the discharge of liquid substances but was also against common sense and logic inasmuch as notwithstanding that the quantity of the Oil found in the tank on board the vessel at the port of loading and at the port of discharge was found to be higher, the fact remained that after discharge which had taken place under the supervision of the surveyors. Customs Authorities, KPT staff and Chief Officer of the tank the quantity of RBD Palm Oil was found less than the quantity in the tank on board the vessel at the port of loading and at the port of discharge which meant that there has been loss in the quantity of oil during the voyage as well as during the operation of discharge of oil from the tank on board the vessel to the land/shore tanks at Karachi. He further submitted that in the above circumstances by no stretch of imagination a party could be made to pay customs duty on the basis of the quantity of oil found on board the vessel either at the port of loading or at the port of discharge as admittedly the quantity of oil mentioned on board the vessel at the port of loading and at the port of discharge was not found in the land/shore tanks at Karachi. He had also drawn our attention to the fact that in the land/shore tanks at the port of loading 17.792.570 M/Tons of oil was found which would raise doubt as to the correctness or authenticity of the two readings of 18,031.404 M/tons and 18,005.411 M/Tons found in the tank on board the vessel at the port of loading and at the port of discharge respectively as it would be impossible that the quantity of RBD Palm Oil would have increased during the pumping operation of the oil from the land/shore tanks to the tank on board the vessel. He further submitted that irrespective whether such a phenomena was possible the petitioner could not be made to pay customs duty on the quantity of oil found in the tank on board the vessel at the port of discharge and the relevant quantity for determining the customs duty would be the quantity of 17.753.947 M/Tons found in the land/shore tanks at Karachi after its discharge from the tank on board the vessel. In support of the proposition he placed reliance on the case of AMOCO Oil Co. v. Parpada Shipping Co. Ltd., reported in (1989) Vol. I. Lioyd's Law Reports 369. In this case the Court of appeal was faced with the determination of question, amongst others of short landing of consignment and observed that the shore discharging measurements would also be accepted for what they purported to record i.e., the quantity of oil received into the tanks that were mesured. It will be appropriate to reproduce the relevant portion from the judgment as, under:

"(3) having considered all the figures the Court concluded that the shore loading figure was reliable and would be accepted subject to the point that it might have included 1283 barrels of bulk sediment and water; the shore discharging measurements would also be accepted for what they purported to record i.e., the quantity of oil received into the tanks that were measured."

Mr. Mazhar Lari also placed reliance on the case of Trading Corporation of Pakistan v. Intercontinental Oceanic Enterprise Corporation and 2 others reported in 2000 CLC 1892 in support of this contentions; firstly, that usually a loss to the extent of 0.25 % is caused in discharge of oil from the tank on board the vessel to the land/shore tanks at the port of destination, and secondly, that the relevant figure to he taken for determining the quantity of the oil imported and discharge at the port of destination would be the quantity of oil discharged in the land/shore tanks at the port of destination.

Mr. Sajjad Ali Shah, learned Standing counsel was unable to advance cogent and plausible arguments in support of his contention that the relevant quantity of oil imported would be the one found in the tank on board the vessel after its arrival at the port of discharge. He was unable to give any explanation as to how the quantity of 17.792.570 M/Tons which was available in the land/shore tanks at the port of loading could have increased to 18,031,404 M/Tons after its pumping in the tank on board the vessel. Mr. Sajjad Ali Shah also questioned the authenticity of the process of measurement of RBD Palm Oil in the land/shore tank at the port of discharge stating that neither there was airy provision under the Customs Act nor any practice existed which required measurement of the oil after it had been discharged from the tank on board the vessel to the land/shore tank. He further submitted that the measurement of the oil in the tank on board the vessel before its discharge in the tank/shore tank was the legal requirement whereafter no further measurement was required arid the figure/reading obtained during the measurement of the oil in the tank on board the vessel was to be taken as final and accepted figure/reading of the quantity of oil discharged from the tank on board the vessel. The submissions made by the learned Standing counsel do not merit consideration. There is no provision of law which bars the measurement of a liquid commodity in the land/shore tank at the port of discharge. There is also no provision in law nor any existing practise which requires acceptance of measurement of oil in the tank on board the vessel as the final measurement or conferring upon such figure/measurement sanctity or undue importance. This issue was discussed at length by Bombay High Court in the case of Bruusgaard Kiosteruds Dampskibs Aktieselskab v. Secretary of State, reported in AIR 1940 Bombay 294. In the case objection was taken to the measurement of the oil which was made five miles away from the ship. The Bombay High Court overruled the objection and held as under:

"Is there anything in section 167(17) which prohibits a measurement of the goods on board being taken at another place? In my opinion, a measurement at another place is not prohibited either by the terms of the section or by implication. To hold otherwise will be to put a very narrow interpretation upon the words of the section. Such a narrow interpretation may sometimes lead to inconvenient and unsatisfactory results, for, cases may arise where the goods have to be measured at places other than on board, and it is not necessary that in every case the goods on board must be measured only on board, and at no other place. There is nothing to prevent the measurement of the quantity on board being made at another place and at a later date, provided the time and place are so reasonably arranged as to ensure that for the purposes of the Act the measurement is a measurement of the goods on board."

In the cited case the provisions of section 167(17) of the repealed Sea Customs Act, 1878 were considered for arriving at the above finding. Section 167(17) of the repealed Sea Customs Act corresponds to section 156(24) of the Customs Act, 1969, which also does not bar measurement of oil at a place other than the ship provided that such measurement is made in the presence of all the concerned; parties. For the foregoing no exception can be taken to the measurement of the RBD Palm Oil made in the land/shore tank at the port of discharge.

After having considered the arguments advanced by the learned counsel for the parties and going through the material on record as well as the case law referred to us by Mr. Mazhar Lari, there is not the least doubt that the effective quantity of oil for the purpose of levy of customs duty would be the quantity of oil discharged in the land/shore tanks at Karachi. It may be pointed out that the figures relating to the quantity of oil found in the tank on board the vessel at the port of loading and at the port of discharge would appear to be doubtful and ambiguous in view of the fact that in the land/shore tanks at the port of destination such quantity of RBD Palm Oil was not available. RBD Palm Oil found in excess in the tank on board the vessel as compared to the quantity available in the land/shore tanks at the port of destination was either incorrectly measured or the tank on board the vessel was not completely empty. This could be the probable or possible explanation as no other plausible and satisfactory explanation was given by the respondents for increase or excess in the quantity of RBD Palm Oil after it was pumped in the tank on' board the vessel. In the case of Trading Corporation of Pakistan v. Intercontinental Oceanic Enterprises Corporation and 2 others (supra) this Court had enumerated several causes due to which loss in the quantity of liquid consignment on board a vessel might occur during the voyage and further that it was not something exceptional or extraordinary. It was also pronounced that loss in quantity of liquid consignments in the tank on board the vessel during the voyage was a usual and essential phenomena. This would easily explain the reason for the loss of quantity in the RBD Palm Oil found in the tank on board the vessel at the port of destination as compared to the quantity found at the port of loading. Subsequently, this quantity was not even found to have been discharged from the tank on board the vessel in the land/shore tanks and .in view of the observations made in the aforecited two cases the quantity of the RBD Palm Oil consignment would be the figure found in the land/shore tanks at the port of destination. For the aforesaid reasons the respondents were not justified on insisting that the quantity of RBD Palm Oil available in the land/shore tanks at the port of destination and pumped in the tank on board the vessel was the correct figure for levying the customs duty. Their demand in calling upon the petitioner to pay customs duty on extra quantity of RBD Palm Oil on the basis of the quantity found in the tank on board the vessel at the port of loading was not justified and cannot be sustained.

For the foregoing reasons and discussions we find that the action of the respondents in demanding further customs duty from the petitioner on the consignment of RBD Palm Oil as per quantity found in the tank on board the vessel at the port of destination is not in accordance with the law as well as contrary to the established practice relating to the discharge of the liquid consignment. Accordingly, we allow this Constitutional petition and direct the respondents to decide the question of refund of customs duty as claimed by the petitioner. The parties, shall bear their own cost.

M.H./F‑46/KPetition allowed