2003 P T D 505

[Supreme Court of Pakistan]

Present: Sh. Riaz Ahmed, C. J., Mian Muhammad Ajmal and Muhammad Nawaz

Abbasi, JJ

PAKISTAAN through Secretary Finance, Islamabad and 5 others

Versus

ARYAN PETRO CHEMICAL INDUSTRIES (PVT.) LTD., PESHAWAR and

others

Civil Appeals Nos. 1176 to 1179 of 2001, decided on 24/07/2002.

(On appeal from the judgment of Peshawar High Court, Peshawar, dated 28‑4‑2000 passed in Writ Petitions Nos. 1932 of 1997, 308 of 1998, 1933 of 1997 and 1953 of 1998).

(a) Manufacturing In‑Bond Rules, 1997‑‑ -

‑‑‑‑R.15(6)‑‑‑Customs Act (IV of 1969), S. 219‑‑‑Central Excises Act (I of 1944), S.37‑‑‑Sales Tax Act (VII of 1990), S.50 ‑‑‑ Constitution of' Pakistan (1973), Art. 185(3)‑‑‑Leave to appeal was granted by the Supreme Court to examine the validity of R.15(6), Manufacturing In -Bond Rules, 1997.

(b) Manufacturing In‑Bond Rules, 1997‑‑‑

‑‑‑‑R.15(6)‑‑‑Customs Act (IV of 1969), S.219‑‑‑Central Excises Act (I of 1944), S.37‑‑‑Sales Tax Act (VII of 1950), S.50‑‑‑Imports and Exports (Control) Act (XXXIX of 1950), S.3‑‑‑Import and Export Order, 1997‑‑Import and Export Order, 1999‑‑‑Export Policy and Procedure Order, 2000‑‑‑Vires of R.15(6), Manufacturing In‑Bond Rules, 1997‑‑ RuIeF 15(6) having been framed by the Central Board of Revenue beyond the scope of statutory provisions of S.219, Customs Act, 1969; S.37 of Central Excises Act, 1944 and S.50 of the Sales Tax Act, 1990 (under which provisions the Rules were framed) would be repugnant to the said statutes‑‑‑Notwithstanding the power of the Federal Government under S.3, Imports and Exports (Control) Act, 1950 to frame a policy by way of issuing an Export and Import Procedure Order, Central Board of Revenue was not competent to make any rule placing restriction on import and export of goods against any country by land route in exercise of its powers under S.219, Customs Act, 1969, S.50, Sales Tax Act, 1990 and S.37, Central Excises Act, 1944‑‑‑Principles.

The controversy in the present case relates to the legality of sub -rule (6) of rule 15 of Manufacturing In‑Bond Rules of 1997 under which restriction has been imposed on the export of shopping bags and plastic sheets to any country by land route. Prior to the promulgation of above rule, the shopping bags and plastic sheets were being manufactured and exported to Afghanistan by land route under Open Bonded Manufacturing Rules, 1989. The Central Board of Revenue, vide letter dated 1‑2‑1996 prohibited export of goods manufactured under Open Bonded Manufacturing Scheme to any country by land route. The imposition of ban by land route on export of the goods through an administrative order, was challenged before the Peshawar High Court, Peshawar, in a Constitutional petition and pending disposal of the said petition, Central Board of Revenue, by virtue of a notification added sub‑rule (7) in rule 13 of Open Bonded Manufacturing Rules, 1989 under which export of goods manufactured under the above said rules was prohibited to any country by land route. However, the Customs Authorities without contesting the writ petition on merits agreed for its disposal on the strength of an order passed by Supreme Court in a similar case and in consequence thereto, the notification dated 12‑3‑1996 became inoperative. Later, on publication of Import and Export Procedure Order, 1997 (Trade Policy 1997) by the Federal Government vide S.R.O. 552(I)/97 dated 28th July, 1997, the C.B.R. in exercise of its power under section 219 of the Customs Act, 1969, section 50 of the Sales Tax Act, 1990 and section 37 of the Central Excises Act, 1944 framed the Manufacturing in Bond Rules, 1997.

The pivotal question for determination in the present case would be regarding the power of C.B.R. to place restriction on the export of goods manufactured under Manufacturing In‑Bond Rules, 1997 to any country by land route in exercise of its rule‑making power under section 219 of the Customs Act, 1969, section 50 of Sales Tax Act, 1990 and section 37 of Central Excises Act, 1944.

The Central Board of Revenue is authorized to frame rules under section 219 of the Customs Act, 1969, section 50 of Sales Tax Act, 1990 and section 37 of 'Central Excises Act, 1944 to give effect to and carry out the purpose of above statutes. The Manufacturing In‑Bond Rules, 1997 framed by the C.B.R. have been made applicable to the clearance of imported goods as specified in the First Schedule to the Customs Act, 1969, excisable goods as set forth in the First Schedule to the Central Excises Act, 1944, and goods/supplies chargeable to sales tax as specified in the Sales Tax Act, 1990, without payment of customs duty, central excise duty and sales tax, as the case may be, for the manufacture of goods primarily meant for export. The prohibition contained on the export of goods was challenged as void on the ground that sub‑rule (6) of rule 15 was ultra vires of the statutes under which it had been framed as, the, said statutes would not govern import and export of goods.

The plain reading of provisions of section 219, Customs Act, 1969, section 50 of Sales Tax Act, 1990 and section 37, Central Excises Act, 1944 would show that the aim of giving the rule‑making power to C.B.R. is to carry out the purpose of the above statutes through the subordinate legislation. The Federal Government in exercise of powers under section 3 of Imports and Exports (Control) Act, 1950, may by an order published in the official Gazette prohibit, restrict or otherwise control the import or export of goods of any specified description and regulate the same through licence system and sub section (3) of section 3 of the said Act, provides that section 16 of the Customs Act, 1969 shall be given effect to in respect of goods, the import and export of which has been prohibited or restricted. Thus the Federal Government has the sole authority to regulate import and export of goods and impose conditions for grant of import and export licence issue orders for carrying out the purpose of Imports and Exports Control) Act, 1950 and make laws for the import and export of goods across the border whereas the function of the C.B.R. is to give effect to Customs Act; 1969, Sales Tax Act, 1990 and the Central Excises Act, 1944 in the light of the policy of the Federal Government as contemplated by the Imports and Exports (Control) Act; 1950. There is clear distinction between the powers of the Federal Government under Imports and Exports (Control) Act, 1950 and the powers of the C.B.R. under Customs Act, 1969, Sales Tax Act, 1990 and Central Excises Act, 1944. The framing of the policy relating to the import and export of goods with or without any restriction is the exclusive function of the Federal Government and the Central Board of Revenue, subservient to the policies of Federal Government, may frame rules under the above- referred statutes subject to the provisions of section 16 of Customs Act under which it is the prerogative of the Federal Government to prohibit or restrict the bringing into or taking out of Pakistan any goods by any route including the goods enumerated in 3rd Schedule to the Customs Act, 1969. Under section 9 of the Customs' Act, 1969 the C.B.R. can declare the places as customs ports, customs airport and land customs' station for clearance of the goods to be imported or exported but is not empowered under said section or any other provision of law to restrict or prohibit the export or import of the goods through land route.

The combined reading of sections 9 and 16, Customs Act, 1969 with section 3 of Imports and Exports (Control) Act, 1950 would show that it is the exclusive jurisdiction of the Federal Government to prohibit the export and import of goods by any route and the C.B.R. may declare the places as customs ports, customs air ports and land customs stations for the clearance of goods to be exported and imported.

The perusal of Import and Export Orders, 1997 and 1999 would show that Federal Government placed no prohibition on the export of commodities produced and manufactured in Pakistan by any route. However, under Export Policy and Procedure Order, 2000, the export of goods manufactured in manufacturing bond was restricted via land route to Afghanistan. It is clear from the Import and Export Orders issued by the Federal Government that the C.B.R. cannot extend its authority of framing rules to carry out the purpose of the said statutes to restrict the export by land route. A statutory rule cannot enlarge the scope of the section under which it is framed and if a rule goes beyond what the section contemplates, the rule must yield to the statute. The authority of executive to make rules and regulations in order to effectuate the intention and policy of the Legislature, must be exercised within the limits of mandate given to the rule‑making authority and‑the rules framed under an enactment must be consistent with the provisions of said enactment. The rules framed under a statute if are inconsistent with the provisions of the statute and defeat the intention of Legislature expressed in the main statute, same shall be invalid. The rule‑making authority cannot clothe itself with power which is not given to it under "w statutes and thus the rules made under a statute, neither enlarge the scope of Act nor can go beyond the Act and must not be in conflict with the provisions of statute or repugnant to any other law in force.

The Manufacturing In‑Bond Rules, 1997 were framed by the C.B.R. to give effect to Customs Act, 1969, Sales Tax Act, 1990 and Central Excises Act, 1944 in respect of the matters specified in the 1st Schedule to the Customs Act, 1969 and excisable goods as set out in 1st Schedule of Central Excises Act, 1944 and the goods chargeable to sales tax as specified in Sales Tax Act, 1990: Under the above rules, the Customs Authorities are empowered to issue licence for manufacturing of goods and regulate all ancillary matters. The licence to a manufacturer under the said rule is issued by the Collector of Customs and in case of breach of any condition of the licence, the Collector of Customs is empowered to suspend and cancel the licence. Under rule 15(6), the restriction placed on the export of goods by the land route to any country is not in consonance with the Export Policy, 1997‑98 and 1999 of Federal Government made under Imports and Exports (Control) Act, 1950 and would also offend the statutory provisions under which the Manufacturing In‑Bond Rules, 1997 have been framed. There is a distinction between the powers of deciding the places as customs stations and routes under section 9 of the Customs Act, 1969 and placing restriction on export of goods by land route or by any other route and thus the goods, export of which is permissible can be exported by any custom route and station if the Federal Government has placed no such restriction on the export of such goods by a route under Imports and Export (Control) Act, 1950. The net result drawn is that rule 15(6) of the rules in question having been framed beyond the scope of statutory provisions, would be repugnant to the statutes and notwithstanding the power of Federal Government under section 3 of Imports and Exports (Control) Act, 1950 to frame a policy by way of suing an Export and Import Procedure Order, the C.B.R. is not competent to make any rule placing restriction on import and export of goods to any country by land route in exercise of its powers under section 219 of the Customs Act, 1969, section 50 of the Sales Tax Act, 1990 and section 37 of Central Excises Act, 1944. The Import and Export Policy and Procedure Order of the Federal Government placing such restriction if any, being not under challenge before the Supreme Court in the present appeals, Court, without entering into the discussion regarding the authority of Federal Government in this behalf held that rule 15(6) of Manufacturing In‑Bond Rules, 1997 was ultra vires the statutes.

(c) Interpretation of statutes‑‑‑

‑‑‑ Statutory rules‑‑‑Scope‑‑‑Statutory rules cannot enlarge the scope he section under which the same has been framed‑‑‑Principles.

A statutory rule cannot enlarge the scope of the section under which it is framed and if a rule goes beyond what the section contemplates, the rule must yield to the statute. The authority of executive to make rules and regulations in order to effectuate the intention and policy of the Legislature, must be exercised within the limits of mandate given to the rule making authority and the rules framed under an enactment must be consistent with the provisions of said enactment. The rules framed under a statute, if are inconsistent with the provisions of the statute and defeat the intention of Legislature expressed in the main statute, same shall be invalid. The rule‑making authority cannot clothe itself with power which is not given to it under the statute and thus the rules made under a statute, neither enlarge the scope of the Act nor can go beyond the Act and must not be in conflict with the provisions of statute or repugnant to any other law in force.

Tariq Javed, Advocate Supreme Court and M. A. Qayyum Mazhar, Advocate‑on‑Record for Appellants.

S.M. Zafar, Senior Advocate Supreme Court and M.S. Khattak, Advocate‑on‑Record for Respondents.

Date of hearing: 24th July, 2002.

JUDGMENT

MUHAMMAD NAWAZ ABBASI, J.‑‑‑These four appeals by leave of the Court have been directed against the judgment, dated 28‑4‑2000 passed by a Division Bench of Peshawar High Court in Constitutional petitions separately filed by the respondents questioning the legality of sub‑rule (6) of rule 15 of the Manufacturing In Bond Rules, 1997 notified by Central Board of Revenue, vide S.R.O. 1140(I)/97, dated 6‑11‑1997. The writ petitions, involving common question of law and facts, were allowed through the impugned judgment against which leave was granted by, this Court in these appeals vide order, dated 1‑6‑2001 in the following terms:‑‑‑

"By this common order we propose to dispose of all the petitions, as questions of law are common in all of them.

(2) We have already granted leave in Civil Appeals Nos.1366 to 1370 and 1404 of 2001 on the question of validity of Rule 15(6) therefore, leave is granted in these cases also to examine the same as through the impugned judgment Peshawar High Court has declared the said Rules to be ultra vires."

2. The leave granting order in Civil Appeals Nos. 1366 to 1370 and 1404 of 2001 is read as under:‑‑‑

"The facts giving rise to these petitions as given by the learned counsel for the petitioners shortly stated are that the petitioners are manufacturing ghee in manufacturing bonds which they exported to Afghanistan. A question arose as to whether the export of the ghee manufactured by petitioners to Afghanistan was prohibited and consequently they were liable to pay custom duty, sale tax, etc. Further question linked with this was that whether they were entitled to duty draw back. The stand taken by the respondents was that under rule 15(6) of the Bond Rules, 1997 (S.R.O. 1140(I)/97), the export of ghee, which was manufactured by the petitioners in manufacturing bonds, had been prohibited. Rule 15(6) (ibid) reads as under:‑‑‑

`15(6). Export of goods manufactured under these rules shall not be permissible to any country by land routes.'

2. We may observe that these rules have been framed by the Central Board of Revenue under section 219 of the Customs Act, 1969, section 37 of the Central Excises Act, 1944 and section 50 of the Sales Tax Act, 1990 which do not govern the matter relating to import and export of goods.

3. The matter relating to import and export of goods is governed by the Import and Export (Control) Act, 1950. Under section 3(1) of this Act, the respondents issued Export Policy and Procedure Order, 2000 which covers the matters relating to import and export of goods. According to para. 5 of this Order, export of all goods have been allowed except those specified in Schedule‑I to this Order. Goods specified in Schedules II and III of the said Order are exportable subject to the conditions mentioned therein. It was not the case of the respondents that the goods manufactured by the petitioners in manufacturing bonds which are subject‑matter of these petitions are covered by Schedule‑I of the Order, therefore, according to this para. there was no prohibition against the export of the same but their case was that export of these goods was not permissible under para. 8 which reads as under:‑‑

"Export to Afghanistan. ‑‑‑Export of all commodities produced or manufactured in Pakistan excluding those manufactured in manufacturing bonds, shall be allowed via land route to Afghanistan against Pak Rupees on filing of regular shipping bills without Form‑E. These exports shall not be entitled to any duty drawback and zero‑rating of sales tax. Export to Afghanistan and via Afghanistan to the Central Asian Republics effected against advance payment or an irrevocable letter of credit issued by some recognized bank in foreign currency shall be allowed duty drawback as per prevailing Schedule subject to a maximum of 7.5% of the f.o.b. value without zero‑rating of sales tax. Normal duty drawback shall remain available on exports to Central Asian Republics via Iran."

4. Learned counsel for the petitioners maintains that rule 15(6) of the Bond Rules, 1997 (S.R.O. No.1140(I)/97), is ultra vires of the Statutes under which the same had been framed, for the said statutes do not govern the matters relating to import and export of goods, therefore, the prohibition against the export of goods in dispute imposed by this rule is void and cannot be enforced. He further argued that para. 5 of Export Policy and Procedure Order, 2000 prohibits export of goods only which were mentioned in Schedule‑I attached to this Order which admittedly does not contain in this list‑ghee manufactured by the petitioners in manufacturing bond, therefore, under this para. the export of the same was permissible and the law relating to export of goods as to duty drawback and payment of custom duty and sales tax, etc., applicable to exported goods under the general law governing the export and import shall be applicable. The case of the respondents was that the export of ghee manufactured by the petitioners in manufacturing bonds to Afghanistan has been prohibited under para. 8 of this Order which has been reproduced above. The case of the petitioners was that this para. does not have the effect of superseding para. 5 permitting the export of goods except those mentioned in Schedule‑I but it covers export goods to Afghanistan manufactured in manufacturing bonds against the Pak Rupees and not otherwise, therefore, to this extent, only this para. would be an exception to para. 5. This argument has been raised without prejudice to the case that this para. does not govern the export of goods but only the matters relating to duty drawback.

5. The questions raised on both the sides are of first impression, therefore, leave is granted to consider the same."

3. The respondents are manufacturers of plastic shopping bags and sheets. They import the raw material for use in the manufacturing of shopping bags and plastic sheets of export of the same to Afghanistan by land route.

4. The controversy in the present case relates to the legality of sub -rule (6) of rule 15 of Manufacturing In Bond Rules of 1997 under which restriction has been imposed on the export of shopping bags and plastic sheets to any country by land route. Prior to the promulgation of above rule, the shopping bags and plastic sheets were being manufactured and exported to Afghanistan by land route under Open Bonded Manufacturing Rules, 1989. The Central Board of Revenue, vide letter dated 1‑2‑1996 prohibited export of goods manufactured under Open Bonded Manufacturing Scheme to any country by land route. The imposition of ban by land route on export of the goods through an administrative order, was challenged before the Peshawar High Court, Peshawar, in a Constitutional petition and pending disposal of the said petition, Central Board of Revenue, by virtue of a notification added sub rule (7) in rule 13 of Open Bonded Manufacturing Rules, 1989 under which export of goods manufactured under the above said rules was prohibited to any country by land route. However, the Customs Authorities without contesting the writ petition on merits agreed for its disposal on the strength of an order passed by Supreme Court in a similar case and in consequence thereto; the Notification dated 12‑3‑1996 became inoperative. Later, on publication of Import and Export Procedure Order, 1997 (Trade Policy, 1997) by the Federal Government vide S.R.O. 552(I)/97 dated 28th July, 1997, the C.B.R. in exercise of its powers under section 219 of the Customs Act, 1969, section 50 of the Sales Tax Act, 1990 and. section 37 of the Central Excises Act, 1944 framed the Manufacturing in Bond Rules, 1997. Sub‑rule (6) of rule 15 of said rules provides as under:‑‑

"15. Manufacture and export of finished goods.‑‑‑

(1)............................................................

(2)............................................................

(3)............................................................

(4)............................................................

(5).........................................................

(6) Export of goods manufactured under these Rules shall, not be permissible to any country by land routes."

5. The appellants challenged the vires of above said sub‑rule (6) in, the Peshawar High Court, Peshawar, through separate Constitutional petitions on the strength of Articles 18, 23, 24 and 25 of the Constitution of Islamic Republic of Pakistan, 1973 which were allowed by the learned Division Bench of Peshawar High Court through the impugned judgment.

6. The pivotal, question for determination in the present cases would be regarding the power of C.B.R. to place restriction on the export of goods manufactured under Manufacturing In Bond Rules, 1997 to any country by land route in exercise of its rule making power under section 219 of the Customs Act, 1969, section 50 of Sales Tax Act, 1990 and section 37 of Central Excises Act, 1944:

7. Learned counsel for the appellants has contended with vehemence that C.B.R. in exercise of its powers under the above statutory provisions, can frame rules for the purpose of regulating the import and export of goods to prevent the evasion of leviable duties and taxes under the said statutes and that to achieve the said purpose is always competent to place restriction on the export of goods to any country by land route and argued that the High Court was misdirected in law in declaring the sub‑rule in question as illegal.

8. The Central Board of Revenue is authorized to frame rules under section 219 of the Customs Act, 1969, section 50 of Sales Tax Act, 1990 and section 37 of Central Excises Act, 1944 to give effect and carry out the purpose of above statutes. The Manufacturing In Bond Rules, 1997 framed by the CBR have been made applicable to the clearance of imported goods as specified in the First Schedule to the Customs Act (IV of 1969), Excisable goods as set forth in the First Schedule to the Central Excises Act, 1944 (I of 1944), and goods/supplies chargeable to sales tax as specified in the Sales Tax Act, 1990, without payment of customs‑duty, central excise duly and sales tax, as the case may be, for the manufacture of goods primarily meant for export. The prohibition contained of the export of goods was challenged as void on the ground that sub‑rule (6) (ibid) was ultra vires of the statutes under which it had been framed as the said statutes would not govern import and export of goods. The determination of the essential question relating to the scope of rule making authority of C.B.R. under the above statutes, necessitates the examination of the following statutory provisions:‑‑‑

Section 219 of Customs Act, 1969:

"219. Power to make rules.‑(1,) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this Act including for charging of fees for processing the customs documents and preparation of copies thereof.

(2) Without prejudice to the generality of the foregoing provision, rules may be made on matters enumerated in Third Schedule.

(3) No rules relating to matters enumerated at items 19 to 22 of the Third Schedule shall be made without previous approval of the Federal Government in writing.

(4) All rules under this section shall, as soon as may be, be laid at the table of the National Assembly.

(5) All such rules for the time being in force shall be collected, arranged, and published at intervals not exceeding two years and shall be sold to the public at a reasonable price."

Section 50 of Sales Tax Act, 1990:

`50. Power to make rules.‑‑‑The Board may, by Notification in the official Gazette, make rules for carrying out the purposes of this Act including rules for charging fee for processing of returns, claims and other documents‑ and for preparation of copies thereof.'

Section 37 of Central Excises Act 1944.

`37. Power of Central Board of Revenue to make rules.‑‑‑(1) The Central Board of Revenue may make rules to carry into effect the purposes of this Act ....'

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may ‑‑‑

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`(3) In making rules under this section, the (Central Board of Revenue) may provide that any person committing a breach of any rule shall, (without prejudice to any other action that may be taken against him under) this Act, be liable to a penalty not exceeding (twenty thousand) rupees (or ten times the amount of (value of goods and services) involved whichever is greater) and that any article in respect of which any such breach is committed shall be confiscated'."

The plain reading of the above provisions would show that the aim of giving the rule making power to CBR is to carry out the purpose of the above statutes through the subordinate legislation. The Federal Government in exercise of powers under section 3 of Imports and Exports (Control) Act, 1950 (Act XXXIX of 1950), may by an order published in the official Gazette prohibit, restrict or otherwise control the import or export of goods of any specified description and regulate the same through licence system and subsection (3) of section 3 of ibid Act, provides that section 16 of the Customs Act, 1969 shall be given effect in respect of goods, the import and export of which has been prohibited or restricted. Thus the Federal Government has the sole authority to regulate import and export of goods and impose conditions for grant of import and export licence, issue orders for carrying out the purpose of Imports and Exports (Control) Act, 1950 and make laws for the import and export of goods across the border whereas the function of the CBR is to give effect to Customs Act, 1969, Sales Tax Act, 1990 and the Central Excise Act, 1944 in the light of the policy of the Federal Government as contemplated by the Imports and Exports (Control) Act 1950. There is clear distinction between the powers of the Federal Government under Imports and Exports (Control) Act, 1950 and the powers of the C.B.R. under Customs Act, 1969, Sales Tax Act, 1990 and Central Excise Act, 1944. The framing of the policy relating to the import and export of goods with or without any restriction is the exclusive function of the Federal Government and the Central Board of Revenue, subservient to the policies of Federal Government, may frame rules under the above referred statutes subject to the provisions of section 16 of Customs Act under which it is the prerogative of the Federal Government to prohibit or restrict the bringing into or taking bat of Pakistan any goods by any route including the goods enumerated in 3rd Schedule to the Customs Act, 1969. Under section 9 of the Customs Act, 1969 the C.B.R. can declare the places as customs ports, customs airport and land customs station for clearance of the goods to be imported or exported but is not empowered under said section or any other provision of law to restrict or prohibit the export or import of the goods through land route. Section 9 and section 16 of the Customs Act, 1969 provide as under:‑‑‑

Section 9:

"9. Declaration of customs‑ports, customs‑airports, etc.‑‑‑The Board may, by notification in the official Gazette, declare‑‑‑

(a) the places which alone shall be customs‑ports or customs air ports for the clearance of goods or any class of goods imported or to be exported;

(b) the places which alone shall be land customs‑stations for the clearance of goods or any class of goods imported or to be exported by land or inland waterways;

(c) the routes by which alone goods or any class of goods specified in the notification may pass by land or inland waterways into or out of Pakistan, or to or from any land customs station or to or from any land frontier;

(d) the places which alone shall be ports for the carrying on of coastal trade with any specified customs‑ports in Pakistan; and

(e) what shall for the purposes of this Act be deemed to be a customs‑house and the limits thereof."

Section 16

"16. Power to prohibit or restrict importation and exportation of goods.‑‑The Federal Government may, from time to time, by Notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land."

10. The combined reading of the above sections with section 3 of the Import and Export (Control) Act, 1950 would show that it is the exclusive jurisdiction of the Federal Government to prohibit the export and import of goods by any route and the C.B.R. may declare the places as customs ports, customs air ports and land customs stations for the clearance of goods to be exported and imported. Import and Export Procedure Order, 1997 published by the Federal Government ire exercise of its power under section 3 of Imports and Exports (Control) Act, 1950, vide Notification, dated 28th July, 1997 under Chapter 19 (Export of goods) provides as under:‑‑

"EXPORT OF GOODS

19.1. Export of goods from Pakistan is allowed generally. However, export of some iten3s is banned, restricted or is subject to certain conditional ties as provided in the Export Policy Order. For that, export in case of live animals and meat shall be in accordance with the procedure notified by Export Promotion Bureau from time to time.

19.2. Export of bona fide baggage accompanied or un accompanied will be permissible without obtaining any authorization from Export Promotion Bureau and Ministry of Commerce. The Customs Authorities will, however, ensure that no banned or restricted items are taken out of the country as accompanied or unaccompanied baggage.

19.3. Export of carpets as personal baggage will be allowed by the Customs Authorities on production of foreign currency encashment certificate. However, such consignment exceeding a value of Rs.10,000 would be accompanied with simplified form of shipping bill prescribed by the C.B.R.

19.4. Export of packed meat shall be allowed against the import of live animals with the condition that 60% of gross weight of the live animals shall be exported as packed meat and the foreign exchange spent on the import of animals will be recovered at least in full by export of meat only. Customs Authorities will devise procedure for such re -exports.

19.5. Re‑export of imported whole chilies and pulses shall be allowed to processors‑‑‑exporters against bank guarantee after value addition. Customs Authorities will devise procedure for such re‑exports.

19.6. Re export of refined sugar against imported raw sugar shall be allowed equal to the quantity imported. Customs Authorities will devise procedure for such re‑exports."

Para. 21 of Schedule II of Import Trade Control Order, 1997 provides as under:‑‑‑

"21. Export of all commodities except kitchen items like wheat wheat flour, rice basmati, Irri‑6, masur pulse (washed), mash pulse (washed), gram pulse (washed), beef, mutton, sugar, milk fresh, vegetable ghee (tinned and loose), cooking oil (tinned), potato, onion, tomato, red chilies (powder) garlic and POL, shall be allowed via land routethrough Afghanistan and the Central Asian Republics at market prices on filing of regular shipping bills, without the facility of duty draw back."

The Import and Export Procedure Order, 1999 provides as under:‑‑‑

"17. Export of goods from Pakistan is allowed generally. However, export of some items is banned, restricted or is subject to certain conditional ties as provided in the Export Policy Order.

"17.7 Export to Afghanistan.‑‑‑(i) Export of all commodities produced or manufactured in Pakistan excluding those manufactured in manufacturing bonds shall be allowed via land route to Afghanistan against Pak‑rupees on filing of regular shipping bills without Form `E'. These exports will, however, not be entitled to any duty drawback and zero‑rating of sales tax. Exports to the Central Asian Republics through Afghanistan shall be allowed against advance payment or Letter of Credit in foreign currency without the facility of duty drawback. However, exports to Central Asian Republics via Iran, are entitled to duty drawback.

(ii) Exports to Afghanistan against route permits of transportation of goods issued by Chief Commissioner of Afghan Refugees and Afghanistan Coordination Cell, Ministry of Foreign Affairs in favour of Afghan nationals as well as International Agencies/NGOs will be allowed only on filing of regular shipping bills as required under the provisions of Imports and Exports (Control) Act, 1950, and Customs Act, 1969. These exports will, however, not be entitled for any duty drawbacks etc. "

Paras. 5 and 8 of Export Policy and Procedure Order, 2000 published by the Federal Government under section 3 of Imports and Exports (Control) Act, 1950, provides as under:‑‑‑

Part 5:

"5. Export of goods.‑‑‑(1) Export of all goods shall be allowed except those specified in Schedule‑I to this order. Export of goods specified in Schedules II and III to this order shall be subject to the conditions given therein.

(2) The provisions of this order shall not apply to:

(a) any goods constituting the stores or equipment or machinery parts and kitchenette of any outgoing vessel, conveyance or airline or the bona fide accompanied baggage of the crew or of the passengers in such vessel or conveyance or airline:

Provided that banned or restricted items shall not be allowed unless otherwise authorized;

(b) any goods trans‑shipped at a port in Pakistan after having been manifested for such trans‑shipment at the time of dispatch from a port outside Pakistan;

(c) any goods, stores or equipment when sold abroad on Government to Government basis or exported under an export authorization issued by the Director General of Defence Purchase or by any other Officer authorized by the Ministry of Defence in this behalf;

(d) export of samples subject to the following conditions, namely:‑‑‑

(i) that the export of such goods is not banned;

(ii) the f.o.b. value does not exceed US $ 5,000 or equivalent per exporter per annum; and

(iii) that the goods are supply free of charge:

Provided that leather garment manufacturers shall be entitled to export fifty samples per annum, irrespective of monetary value:

Provided further that the monetary and quantitative ceilings shall not be applicable if the samples are exported in a mutilated form;

(c) export of gift parcels of a, value not exceeding ten thousand rupees;

(f) export of relief goods to any part of the world by the Cabinet Division (Relief Cell), Government of Pakistan;

(g) bona fide baggage of persons travelling outside Pakistan;

(h) persons travelling outside Pakistan who may take with them as accompanied baggage, goods without any restriction of quantity, or any requirement of encashment certificates provided that such goods do not include items listed at Schedules I and II and that in respect of items of Schedule III the prescribed conditions have been met.

(3) Transit and Border Trade shall be allowed under the procedure prescribed therefore."

Para. 8:

"8. Exports to Afghanistan:‑‑‑Export of all commodities produced or manufactured in Pakistan, excluding those manufactured in manufacturing bonds, shall be allowed via land route to Afghanistan against Pak‑rupees on filling of regular shipping bills without Form `E'. These exports shall not be entitled to any duty drawback and zero‑rating of sales tax. Exports to Afghanistan and via Afghanistan to the Central Asian Republics effected, against advanced payment or as irrevocable letter of credit issued by some recognized bank in foreign currency shall be allowed duty drawback as per prevailing Schedule subject to a maximum of 7.50 of the f.o.b. value without zero‑rating of sales tax. Normal duty drawback shall remain available on exports to Central Asian Republics via Iran."

The following amendment was made in the above said policy through Notification S.R. 137(1)/2002, dated 7‑3‑2002.

"EXPORT POLICY AND PROCEDURE ORDER, 2000

[Gazette of Pakistan Extraordinary, Part II, 7th March, 2002]

S.R. No. 137(I)/2002, dated 7‑3‑2002.‑‑‑In exercise of the powers conferred by subsection (1) of section 3 of the Imports and Exports (Control) Act, 1950 (XXXIX of 1950), the Federal Government is pleased to direct that the following further amendments shall be made in the Export Policy and Procedure Order; 2000, namely:‑‑‑

In the aforesaid‑Order.

(1) for paragraph 8 the following shall be substituted, namely:‑‑‑

(8) Export to Afghanistan and through Afghanistan to Central Asia Republics.

(1) In Pak Rupees.‑‑‑Subject to provisions of sub‑paragraph (1) of paragraph 5, export of all commodities produced or manufactured in Pakistan, excluding those manufactured in manufacturing bonds, shall be allowed via land route, against Pak‑rupee on filing of regular shipping bills without Form `E` Such exports shall not be entitled to (i) zero‑rating of sales to on taxable goods, (ii) rebate of central excise duty; and (iii) repayment of drawback of customs‑duty.

(2) In convertible currency.‑‑‑Subject to provisions of sub‑para. (1) of paragraph 5 and Schedule IV, all items and commodities produced or manufactured in Pakistan exported via land route or by air against irrevocable letters of credit, or advance payment, in convertible foreign currency, shall be allowed (i) zero‑rating of sales tax on taxable goods, (ii) rebate of central excise duty and (iii) repayment for drawback of customs‑duty, subject to the following conditions, namely:‑‑‑

(a) The Pakistan Embassy or Consulate in Kabul, Kandhar and Jalalabad shall verify the arrival of export consignments from Pakistan. (This condition of verification from Pakistan Missions shall remain suspended until these Missions or Sub‑Missions become fully functional);

(b) Packages or packing shall be prominently and indelibly be marked with the expression `For Export Only' and in case of international donor agencies `For' export only‑‑‑supply for aid to Afghanistan (insignia of the organization)‑‑‑not for sale in Pakistan';

(c) Export shall be allowed only through authorized export land routes i.e. Torkham and Chamman; and

(d) Export from Export Processing Zones and manufacturing bonds, except vegetable ghee and cooking oil, shall be allowed but these exports shall not be entitled to (i) zero‑rating of sales tax on taxable goods, (ii) rebate of central excise duty; and (iii) repayment or drawback of customs duty.

(3) Exports by international donor agencies. ‑‑‑Export of such goods as made by or on behalf of UNHCR, World Food Programme, UNDP, UNFPA, ICRC, WHO, FAO, UNICEF against international tenders, as relief goods to Afghanistan, shall be allowed the facility of normal duty drawback against payment in convertible foreign currency, through all standard modes of payment including letters of credit, advance payment and DA/DP basis.

(4) Normal duty drawback shall remain available on exports to the 'Central Asian Republics via Iran.

(5) Export of acetic anhydride of Afghanistan shall not be allowed till further orders.

(2) After Para. 12‑A the following new paragraph shall be inserted, namely:‑‑‑

`12‑B. Export of petroleum and petroleum products to Afghanistan. ‑‑‑The export of petroleum and petroleum products shall be made by refineries and approved oil marketing companies only zero‑rating of sales tax, rebate of central excise duty and normal repayment/drawback of customs duty shall be allowed on these products against irrevocable letters of credit or advance payment in convertible currency';

(3) in Schedule I for Serial No. 9 in column (1) and the entries relating to in columns (2) and (3) the following shall be substituted, namely:‑‑‑

`9. Vegetable ghee and cooking oil.‑‑‑The export of vegetable ghee and cooking oil shall be allowed (excluding that manufactured in manufacturing bonds in case of exports to Afghanistan only) provided there is value addition of fifteen per cent for edible uses in packs up to five litres for cooking oil and five kilograms for vegetable ghee and fifty per cent value addition in non‑edible uses in packs up to one half litre of half kilogram'; and

(4) after Schedule III the following new Schedule shall be added, namely:‑‑‑

SCHEDULE‑IV

(see paragraph 8)

Negative List of items for

exports to Afghanistan under duty Drawback Scheme;

(1) Cigars, cheroots, cigarillos and cigarettes of tobacco or of tobacco substitutes.

(2) Dyes and chemicals.

(3) Yarn all types.

(4) PVC and PMC materials.

(5) Polyster metalized film.

(6) Ball bearings.

(7) Vegetable ghee and cooking oil (if exported from export Processing Zones or manufacturing bonds.)'

11. The Perusal of Import and Export Orders, 1997 and 1999 would show that Federal Government placed no prohibition on the export of commodities produced and manufactured in Pakistan by any route. However, under Export Policy and Procedure Order, 2000, the export of goods manufactured in manufacturing bond was restricted via land route to Afghanistan. It is clear from the above referred Import and Export Orders issued by the Federal Government that the C.B.R. cannot extend its authority of framing rules to carry out the purpose of the above said statutes to restrict the export by land route. This is a settled principle that a statutory rule cannot enlarge the scope of the section under which it is framed and if a rule goes beyond what the section contemplates, the rule must yield to the statute. The authority of executive to make rules and regulations in order to effectuate the intention and policy of the Legislature, must be exercised within the limits of mandate given to the rule making authority and the rules framed under an enactment must be consistent with the provisions of said enactment. The rules framed under a statute if are inconsistent with the provisions of the statute and defeat the intention of Legislatures expressed in the main statute, same shall be invalid. The rule making authority cannot clothe itself with power which is not given to it under the statutes and thus the rules made under a statute, neither enlarge the scope of act nor can go beyond the act and must not be in conflict with the provisions of statute or repugnant to any other law in force.

12. The Manufacturing In Bond Rules, 1997 were framed by the CBR to give effect to Customs Act, 1969, Sales Tax Act, 1990 and Central Excises Act, 1944 in respect of the matters specified in the 1st Schedule to the Customs Act, 1969 and excisable goods as set out in 1st Schedule of Central Excises Act, 1944 and the goods chargeable to sales tax as specified in Sales Tax Act, 1990. Under the above rules, the Customs Authorities are empowered to issue licence for manufacturing of goods and regulate all ancillary matters. The licence to a manufacturer under tile said rule is issued by the Collector of Customs and in case of breach of any condition of the licence, the Collector of Customs is empowered to suspend and cancel the licence. Under rule 15(6), the restriction placed on the export of goods by the land route to any country is not in consonance with the Export Policy; 1997‑98 and 1999 of Federal Government made under Imports and Exports (Control) Act, 1950 and would also offend the statutory provisions under which the Manufacturing In Bond Rules, 1997 have been framed. There is a distinction between the powers of deciding the places as customs stations and routes under section 9 of the Customs Act, 1969 and placing restriction on export of goods by land route or by any other route and thus the goods, export of which is permissible can be exported by any custom route and station if the Federal Government has placed no such restriction on the export of such goods by a route under Imports and Export (Control) Act, 1950. The net result drawn is that rule 15(6) of the Rules in question having been framed beyond the scope of statutory provisions, would be repugnant to the statutes and notwithstanding the power of Federal Government under section 3 of Imports and Exports (Control) Act, 1950 to frame a policy by way of issuing an Export and Import Procedure Order the C.B.R. is not competent to make any rule placing restriction on import and export of goods to any country by land route in exercise of its powers under section 219 of the Customs Act, 1969, section 50 of the Sales Tax Act, 1990 and section 37 of Central Excises Act, 1944. The Import and Export Policy and Procedure Order of the Federal Government placing such restriction if any, is not under challenge before us in the present appeals, therefore, we without entering into the discussion regarding the authority of Federal Government in this behalf hold that rule 15(6) of Manufacturing In Bond Rules, 1997 was ultra vires to the statutes. We, therefore, while upholding the impugned judgment, dismiss these appeals. There shall be no order as to costs.

M.B.A./P‑85/SC Appeals dismissed.