HUBCO POWER COMPANY LTD. VS COLLECTOR OF CUSTOMS, (EXPORT), 2005 PTD-KARACHI-HIGH-COURT-SINDH 1726 (2005)

(a) Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 35 & 36‑‑‑Duty drawback on re‑export of goods‑‑‑Admissibility‑‑‑Identification of goods‑‑‑Necessity‑‑‑Duty drawback could be claimed on goods other than those, which had been imported‑‑‑Under S.35 Customs Act, 1969, goods capable of being identified, when imported upon payment of customs duties, then 7/8 of duties would be repaid as drawback, if exported within two years of their import and identified to be the same goods as had been imported‑‑‑Under S.36 of Customs Act, 1969, repayment of duty as drawback in respect of goods put into use between‑their import and export would be made in accordance with rules‑‑‑Section 36 of Customs Act, 1969 would be applicable to goods used in Pakistan before its re‑export, and duty drawback in such case would not be 7th/8th of import duty, but would depend upon statutory rules‑‑‑Principles.

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 35 & 36‑‑‑Duty drawback on re‑export of goods‑‑‑Inability to identify goods due to non‑signing of packing list by Master Shed Appraiser at the time of export‑‑‑Validity‑‑‑In absence of any specified rule, no weight could be attached to factum of non‑signing of packing list.

Anjum Ghani for Petitioner.

Faisal Arab, Standing Counsel, Jawed Farooqui and Raja Muhammad Iqbal for Respondents.

Date of hearing: 26th January, 2005.

JUDGMENT

SABIHUDDIN AHMAD, J.‑‑‑The petitioner had imported some used equipment for carrying out construction work in Pakistan in March, 1994. They have claimed that such equipment was re -exported in October, 1994, but the respondents unlawfully declined to grant them the benefit of duty drawback under the Customs Act. From the show‑cause notice, dated 26‑12‑1994 they have called in question the order‑in‑original of the respondent No. 1, dated 27‑2‑1995, which was up‑held in appeal by the respondent No. 2 vide order, dated 5‑11‑1995. It appears from the orders impugned before us that the benefit of duty drawback was declined upon the following grounds:‑‑

(i) The packing list produced at the time of export had not been signed by the Master Shed Appraiser at the time of import of equipment;

(ii) That the weight of the consignment was misdeclared and whereas the net weight at the time of import had been declared to be 62,595, which was also declared in the bill of export, upon physical weighment it was found to be 58, 190 Kg;

(iii) That the gross value of the goods had been grossly over‑invoiced in order to obtain excessive drawback inasmuch as duty of such goods should normally has been assessed at Rs.25000 per metric ton at the time of import.

(iv) The equipment had been imported in 3 forty feet containers belonging to the petitioner which was not exported with the equipment.

2. In respect of ground of (iv) the petitioners have admitted that they were not exporting the containers at the relevant time and no duty drawback was claimed. We also found force in the ground No. (iii) as has been conceded by the learned standing counsel. Obviously the petitioners would be entitled to drawback on the basis of the import duty that he has paid and no question of over‑invoicing for the purpose of claiming undue drawback would arise. With respect of grounds Nos. (i) and (ii) Mr. Anjum Ghani, learned counsel for the petitioners argued that section 36 and not section 35 applied to the petitioner's case as the imported goods had been put to use in Pakistan. To this extent the contention appears unexceptionable. However, we find no force in his subsequent assertion that identification of goods contemplated by section 35 was not at all applicable to cases covered by section 36. Indeed section 35 provides that whenever goods, capable of being easily identified are imported into Pakistan and upon payment of customs duties, seven‑eight of such duties shall be repaid as drawback, in case they are exported within two years of their import and are identified to be the same goods as had been imported. Section 36, on the other hand, provides that notwithstanding any thing contained in section 35, the repayment of duty as drawback in respect of goods which have been taken into use between their import and subsequent export, shall be made in accordance with the rules. In other words, section 36 appears to be explicitly applicable to those goods which were used in Pakistan before being re‑exported. The extent of duty drawback in such cases will not be seven‑eight of the import duty paid but would depend upon statutory rules. Incidentally the drawback (same state goods) 2001 deals with the rates of drawback on a sliding level depending upon the period of use in Pakistan.

3. The facts, nevertheless, remains that duty drawback by its very nature can only admissible on the re‑export of goods which had once been imported into Pakistan. Therefore, the contention that no identification of the goods is necessary does not, in our humble view, appear to make any sense. Obviously a person cannot claim drawback on goods other than those which he had imported.

4. In respect of identification the respondents Nos. 1 and 2 had arrived at a finding of fact to the effect that the packing list had not been signed by the Master Shed Appraiser who was even otherwise unable to identify the same as being those that had been imported. While in the absence of any specifying rule being pointed out by the learned counsel for the respondents, we were not prepared to attach much weight to the facutm of non‑signing of the packing list, but it was surprising to note that the packing list delivered by the petitioner at the time of export of the goods contained the price of different items in rupees and was therefore, different from the list provided by the French supplier at the time of import. Moreover, there was a clear finding of fact to the effect that whereas the, net weight of the consignment at the time of import was claimed to be 62,595 Kg. and the same net weight was declared in the bill of export, whereas the net weight was found on physical weighment as 58,190 Kg. This shortfall of 4450 Kg. or 4.5 metric ton was not disputed by the petitioner in reply to the show‑cause notice but they merely considered it to be 'normal' and requested for condonation. In the circumstances we are satisfied that there was sufficient grounds available with the respondents to declare that the goods had not been duly identified and therefore, the benefit of duty drawback was not admissible to the petitioner. Therefore we do not find any force in this petition. However, Mr. Anjum Ghani Khan, learned counsel for the petitioner pointed out that despite the penalty of one million imposed by the respondent No.1 was reduced to Rs.25,000 by the respondent No.2 in appeal, but the difference has not been refunded to the petitioner. Learned Standing Counsel and Mr. Raja Muhammad Iqbal, learned counsel for the respondents undertook that they would verify the fact and in case such amount has not yet been refunded, the same would be refunded to the petitioner within two months from today. Subject to the above direction the petition is dismissed.

S.A.K./H‑51/K Petition dismissed.