Messrs LEVER BROTHERS PAKISTAN LTD. VS CUSTOMS, SALES TAX AND CENTRAL EXCISE APPELLATE TRIBUNAL
2005 P T D 2462
[Karachi High Court]
Before Anwar Zaheer Jamali and Muhammad Mujeebullah Siddiqui, JJ
Messrs LEVER BROTHERS PAKISTAN LTD.
Versus
CUSTOMS, SALES TAX AND CENTRAL EXCISE APPELLATE TRIBUNAL through Registrar and another
Customs Appeals Nos. 122 to 125 of 2000, decided on /01/.
th
August, 2005. (a) Customs Act (IV of 1969)---
----S.196---Appeal to High Court---Scope---Appellate Tribunal is entirely a final fact-finding authority---High Court, while exercising advisory jurisdiction in tax matters shall express its opinion on the basis of facts as determined by the Tribunal---Appeal/reference to the High Court lies on the point of law arising out of the order of the Tribunal and therefore, findings of facts given by the Tribunal shall be final, not open to further examination/scrutiny by High Court and the opinion in exercise of advisory jurisdiction shall be given on the basis of facts as determined by the Tribunal.
Iram Ghee Mills (Pvt.) Limited v. Customs, Central Excise and Sales Tax (Appellate) Tribunal 2004 PTD 559 ref.
(b) Customs Act (IV of 1969)---
----S.19---S.R.O. No.484(I)/92, dated 14-5-1992---S.R.O. 512(I)/94 dated 9-6-1994---Interpretation of S.R.O. 484(I)/92, dated 14-5-1992---Exemption granted by clauses (a) and (b) of S.R.O. No.484(I)/92; dated 14-5-1992---Scope.
(c) Customs Act (IV of 1969)---
----S.195---Powers of Central Board of Revenue---Scope---Central Board of Revenue has no place in the Scheme of law, conferred with the jurisdiction to interpret any law, statutory or in exercise of delegated authority, i.e. subordinate legislation.
Central Insurance Companies 1993 PTD 766 ref.
(d) Customs Act (IV of 1969)---
----S.19---S.R.O. 484(I)/92, dated 14-5-1992---S.R.O. 1284(I)/90 read with C.B.R. clarification dated 14-1-1991---Exemptions granted by notifications S.R.O. 484(I)/92 and S.R.O. 1284(1)/90 are not similar---Scope of the two notifications elaborated.
(e) Customs Act (IV of 1969)---
----Ss.19, 30 & 31-A---S.R.O. 484(I)/92, dated 14-5-1992---S.R.O. 512(I)/94, dated 9-6-1994---Import of machinery for installation at an Industrial Estate---Exemption granted under S.R.O. 484(I)/92, dated 14-5-1992 as amended by S.R.O. 512(I)/94, dated 9-6-1994 resulting in substitution of Table II of S.R.O. 484(I)/92---Effect---When all the imports were made after the substitution of Table II of S.R.O. 484(I)/92, exemption granted under S.R.O. 484(I)/92 was no more available---Principles.
(f) Customs Act (IV of 1969)---
----Ss. 19, 32, 30 & 31-A---S.R.O. 484(I)/92, dated 14-5-1992---S.R.O. 512(I)/94, dated 9-6-1994---Misdeclaration and furnishing of incorrect statement---Import of machinery for installation at an Industrial Estate---Exemption---Admittedly on the date of filing of Bills of Entry the exemption Notification S.R.O. 484(I)/92, dated 14-5-1992 was no more in the field but the exemption notification occupying the field and applicable to the imports, made in the present case, was S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94, dated 9-6-1994---Claim of exemption under the unamended notification was therefore a clear misdeclaration and incorrect statement---Fact that the importer had not mentioned that the place where the imported machinery was to be installed was situated in the Industrial Estate, was a clear concealment of fact amounting to misdeclaration in a very clever and clandestine manner giving impression as if the unit was situated in a rural area simpliciter, although the importer was required to disclose in the written declaration in pursuance of the condition precedent in terms of exemption notification that the unit was situated in the areas specified in Table II of the notification---Principles.
(g) Customs Act (IV of 1969)---
----Ss.32 & 19---S.R.O. 484(I)/92, dated 14-5-1992---S.R.O. 512(I)/94, dated 9-6-1994---Import of machinery for installation at a place specified in the exemption notification ---Misdeclaration and furnishing of incorrect statement---Provision of 5.32(1), Customs Act, 1969 provides that if any person, in connection with any matter of customs makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of Customs any declaration, notice, certificate or other document whatsoever, knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under S.32 of the Customs Act, 1969---Words and expressions used by the legislature in S.32 of the Act are comprehensive enough to cover any incorrect declaration or information in any document in connection with the matter of customs having the effect of causing loss to revenue ---Misdeclaration or concealment etc. is not confined to the declaration/statement in respect of goods only---Exemption, in the present case, could be claimed if the goods imported were plant and machinery not locally manufactured and further if it was intended to be installed at the places specified in the exemption notification and the availability of exemption was contingent on filing of declaration showing the location of the industrial unit---Importer having not correctly shown the location of the industrial unit, he had made a misstatement/ misdeclaration attracting the provision contained in S.32, Customs Act, 1969.
(h) Customs Act (IV of 1969)---
----S.32---Untrue statement---hens rea was not required to be established for the purpose of attracting the provisions contained in S.32, Customs Act, 1969---Principles.
(i) Customs Act (IV of 1969)---
----Ss.32 & 156---Misdeclaration/misstatement in connection with any matter of the customs---Invocation of 5.32, Customs Act, 1969 and imposition of penalty and confiscation of goods---Principles elaborated.
(j) Customs Act (IV of 1969)---
----S. 19(3)---Protection of Economic Reforms Act (X of 1992), S.6---S.R.O. 484(I)/92, dated 14-5-1992---S.R.O. 512(I)/94, dated 9-6-1994---Exemption---Protection under 5.6, Protection of Economic Reforms Act, 1992---Availability---Held, on account of retrospective insertion of subsection (3) in S.19 of the Customs Act, 1969, protection claimed under S.6 of the Protection of Economic Reforms Act, 1992 was no more available---Protection available under S.6, Protection of Economic Reforms Act, 1992 had been nullified irrespective of the fact whether the reliance was placed on a notification or on the principle of promissory estoppel contained in the letter of authorization or in any other document or law.
(k) Customs Act (IV of 1969)---
---S. 19(3)---S.R.O. 484(I)/92, dated 14-5-1992 Table II---S.R.O. 512(I)/94, dated 9-6-1994---Exemption---When the Bills of Entry were filed, Table II of S.R.O. 484(I)/92, dated 14-5-1992 was already amended through S.R.O. 512(I)/94, dated 9-6-1994, whereby the exemption from the payment of whole customs duty was withdrawn and the exemption was allowed from payment of customs duty as was in excess of 10% ad valorem---Consequently, the exemption from payment of whole of the customs duty was being claimed in the absence of notification in this behalf---Validity---Once any S.R.O. is rescinded, withdrawn, altered, amended or substituted then to the extent such of withdrawal, alteration, amendment or substitution the earlier notification wholly or partially, as the case may be, does not remain operative and is to be treated as absent---Legislature, even to the disadvantage of a beneficiary, can make any retrospective amendment in law---Such judgment is vested in the legislature.
(l) Customs Act (IV of 1969)---
----S. 32---Untrue statement---Issuance of show-cause notice under 5.32, Customs Act, 1969---Past and closed transaction---Determination---Principles.
A transaction becomes past and closed when it attains finality meaning thereby that it cannot be reopened. After a matter is decided by a competent forum and no appeal, revision or petition, as the case may be, is filed within the specified period, it shall be deemed to have attained finality and the status of past and closed transaction. However, if any appeal, revision or petition is filed then until and unless the matter is decided by the highest forum it shall not become past and closed transaction. The pending proceedings can never be held to be final and falling within the category of past and closed transaction. Likewise, if any matter pertaining to the evasion of tax on account of non-levy or short-levy of tax or non-payment thereof can be reopened within the period of limitation provided in law then it cannot be treated as past and closed transaction, if it is reopened within the period of limitation provided in law. If the case is not reopened within the period of limitation then on expiry of such period it shall attain the status of past and closed transaction and in case it is re-opened within the period of limitation, then it becomes past and closed transaction, after final adjudication.
(m) Customs Act (IV of 1969)---
----S.32(2)(3)(3-A)---Untrue statement---Service of notices under S.32(2)(3) & (3-A) of the Customs Act, 1969 within the period of limitation specified in S.32, Customs Act, 1969 is a condition precedent for acquiring jurisdiction to 're-open such cases---Principles.
(n) Customs Act (IV of 1969)---
----S.32(2)---Untrue statement---Case of misstatement/misdeclaration made by the importer and consequential non-levy of customs duty would fall under S.32(2) of the Customs Act, 1969.
(o) Customs Act (IV of 1969)---
----S. 32(1)(2)---Untrue statement---Show-cause notice---Limitation.
(p) Customs Act (IV of 1969)---
----S.32(2)(3)---Untrue statement---Show-cause notice---Significance---Where it was not a case of non-levy of tax on account of any inadvertence, error or misconstruction but was a case of non-levy of tax on account of misstatement/ misdeclaration in the Bill of Entry, the show-cause notice was required to be issued under S.32(2) and not under S.32(3) of the Customs Act, 1969---Service of notice under appropriate provision of law was condition precedent for acquiring the jurisdiction---Show-cause notice being jurisdictional in nature, its absence made the active proceedings without, jurisdiction---Notice under wrong provision in respect of a Bill of Entry was without jurisdiction and consequently demand raised in that case was void and not enforceable in law.
(q) Customs Act (IV of 1969)---
----S.32(2)(3)---Untrue statement---Show-cause notice---If a notice under subsection (2) of 5.32 of the Customs Act, 1969 is issued, but ultimately it is found that the case was covered under subsection (3), no further notice is required to be issued under subsection (3) on the principle that a lesser charge, liability or allegation was always deemed to be a part of higher charge, liability or allegation, provided the notice is served 'within the period of limitation specified in subsection (3)---When a notice is served under subsection (2) and the case is found to be covered under subsection (3) but it is served beyond the period of limitation specified in subsection (3), the entire proceedings shall be rendered void being without jurisdiction---Where the notice is served under subsection (3) within the period specified in this subsection or beyond such period but within the period specified in subsection (2) and the case is found to be covered under subsection (2) such a notice shall not clothe the Adjudicating Officer with jurisdiction---Proceedings shall be void for want of service of notice of proper jurisdictional nature---Reasons elaborated.
If a notice under subsection (2) of section 32 of the Customs Act, 1969 is issued, but ultimately it is found that the case was covered under subsection (3), no further notice is required to be issued under subsection (3) on the principle that a lesser charge, liability or allegation was always deemed to be a part of higher charge, liability or allegation, provided the notice is served within the period of limitation specified in subsection (3). If a notice is served under subsection (2) and the case is found to be covered under subsection (3) but it is served beyond the period of limitation specified in subsection (3), the entire proceedings shall be rendered void being without jurisdiction. However, if notice is served under subsection (3) within the period specified in this subsection or beyond such period but within the period specified in subsection (2) and the case is found to be covered under subsection (2) such a notice shall not clothe the Adjudicating Officer with jurisdiction. The proceedings shall be void for want of service of notice of proper jurisdictional nature. The reason being that in the proceedings under subsection (3) no allegation or charge is required to be levelled against an assessee: The loss of revenue which is required to be retrieved is occasioned on account of mere inadvertence, error or misconstruction on the part of assessee or the customs officials, attributing no culpability on the part of assessee. He is therefore, not required to furnish any explanation with regard to the misstatement or misdeclaration. Sub-section (3) does not cover any case of misstatement or misdeclaration. At the most, it will cover the case of honest difference of opinion or genuine interpretation, though it may ultimately be found to have been raised on account of any error of judgment or misconstruction or inadvertence and thus, not acceptable to the departmental officers and even by the superior Courts. On the other hand, jurisdiction under subsection (2) is dependent on allegation/charge of misdeclaration/ misstatement which is required to be explained by the assessee. The converse principle is applicable to such case which is to the effect that the higher offences are never treated to be the part of offences/acts of lower magnitude. The cases covered under subsection (2) though are confined to civil liability but, of the higher magnitude, as compared with the cases covered under subsection (3). For this reason the period of limitation specified in. subsection (21 is more than the period specified in subsection (3). Consequently, a notice under subsection (3) shall not confer jurisdiction to proceed with the cases covered under subsection (2) hint vice versa is permissible.
Central Cotton Mills Ltd. v. Collector of Central Excise and Land Customs 1992 CLC 841; Ibrahim Textile Mills Ltd. v. Federal Government PLD 1989 Lah. 47; Federal Government v. Ibrahim Textile Mills 1992 SCMR 1898, Muhammad Hussain v. Collector of Customs 1991 MLD 1456; Pakistan International Airlines Corporation v. Central Board of Revenue 1990 CLC 868; Eastern Rice Syndicate v. Central Board of Revenue PLD 1959. SC 364; Hardcastle Wand (Pakistan) Limited v. Pakistan PLD 1962 Kar. 895; Abdul Hadi v. Ali Haider PLD 1983 SC 342; Messrs Gatron Industries v. Government of Pakistan 1999 SCMR 1072; Government of Pakistan v. Fecto Belarus Tractors Ltd. (Civil Appeal No. 1174 of 1997); C. P. No. D-1142 of 2003; C.P. No.D-1613 of 2001; Fecto Belarus Tractors Ltd. v. Pakistan 2001 PTD 1829, Messrs, Gatron Industries Ltd.'s case 1999 SCMR 1072 mentioned.
Sana Minhas for Appellant
Raja M. Iqbal for Respondents.
Dates of hearing: 9th, 10th and 11th February, 2005.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---Common questions of law are involved in the above appeals under section 196 of the Customs Act, 1969. All the appeals have been heard together and are disposed of by this single judgment.
2. The common questions of law raised in the above appeals are as follows:--
(i) Whether the plant and machinery imported by the appellant was exempt from the whole of customs duty and sales tax?
(ii) Whether CESAT erred in interpreting the provisions of the Protection of Economic Reforms Act, 1992, and the judgments of the superior Courts relating thereto?
(iii) Whether the show-cause notice served on the appellant was time-barred?
(iv) Whether the CESAT erred in law by enforcing the demand under subsection (2) of the section 32 of the Customs Act, 1969, when the show-cause notice was clearly issued and the Appellant was only called upon to answer the charge under subsection (3) of section 32 of the Customs Act, 1969?
3. The common facts giving rise to the above questions are that the appellant is a limited company, engaged, inter alia in the manufacture of Ice-cream by the brand name of `WALLS'. The appellant's Ice-cream unit for `Walls' is located in Mouza Nathey Jagir, Tehsil Pattoki, District Kasur, Province of Punjab. The appellants imported machinery for installation at the above location vide four Bills of Entry, dated 22-8-1994. 22-9-1994, 8-10-1994 and 12-10-1994.
4. In all the four Bills of Entry the following declarations were made:--
"(1) The goods imported will be installed at 37.7 KM Multan Road Mouza Nathey Jagir Tehsil Pattoki.
(2) Location Certificate No.DDI/LCF/9/36/85, dated 26-2-1994, issued by Director of Industries, Lahore Division (enclosed).
(3) C.B.R.'s Order No.1(90)MACH/84, dated 25 July, 1994 (enclosed).
5. The exemption from payment of customs duty and sales-tax was claimed in the following terms:--
"Exemption of duty and sales-tax free as per S.R.O. 484(I)/92, dated 14-5-1992."
6. The exemption as claimed above, was allowed. The appellant furnished an Indemnity Bond as per the requirement of notification. It was to be discharged after submission of installation certificate issued by the Assistant Collector of Customs and Excise, within a period of one year. The installation certificates were submitted within specified period.
7. However, show-cause notices under section 32 of the Customs Act, 1969 were received by the appellant on 5-4-1995, 13-5-1995 and 14-5-1995 in respect of all the four Bills of Entry' dates whereof have been given in the earlier part of this judgment respectfully.
8. In one notice, dated 14-5-1995, the reason for issuance of show-cause notice is shown as follows:--
"The import duties in respect of the above consignments are found to have been short-levied because of the following reasons:--
"Industrial unit located at Industrial Estate Chunian which is charged to duty at 10% instead of whole exemption from customs duty under S.R.O. 484(I)/92, dated 14-5-1992.
9. In the second notice, dated 14-5-1995 the reason for short levy was shown as follows:--
"Machinery imported are not covered under S.R.O. 484(I)/92.
10. In the notice, dated 5-4-1995 it was stated that the customs duty and other taxes in respect of the above consignment are found to have been short levied because of the following reasons:--
"The goods were released without charges, customs duty and sales-tax in terms of S.R.O. 484(I)/92, the machinery have been imported for installation in Chunian Industrial Estate and such customs duty at 10% was leviable in terms of the above referred S.R.O. The incorrect application of S.R.O. 484(1)/92, resulting loss of revenue of Rs. 1,10,999. Hence this demand."
11. In the notice, dated 13-5-1995 it was stated that the import duties were short-levied because of the following reasons:--
"Machinery imported and installed in Industrial Estate Chunian have been exempted incorrectly."
12. It would be appropriate to observe here that all the four show-cause notices were issued through stereotyped pro formal by filling in the blanks. All the proformas were in respect of the notices to be issued 'under subsection (3) of section 32 of the Customs Act, 1969. However, two notices, dated 14-5-1995 and one notice, dated 13-5-1995 were issued by the Assistant Collector of Customs (Appraisement) Mr. Jawaid Ovais Agha and he was vigilant enough to score off subsection (3) and insert subsections (1) and (2) in its place. But, in the notice, dated 5-4-1995 no such vigilance has been shown and the notice has been issued under subsection (3) of section 32 of the Customs Act, 1969. The effect of this negligence on the part of officer issuing the notice, dated 5-4-1995 whose name is not legible shall be considered at later stage.
13. A very lengthy common reply to the show-cause notices was filed by the learned counsel for the appellant wherein the issuance of show-cause notices was assailed on the following grounds:--
(1) The show-cause notices were void and without lawful authority.
(2) The information on the basis whereof, show-cause notices were issued were not disclosed.
(3) The show-cause notice, dated 5-4-1995 was issued under section 32(3) of the Customs Act, 1969, while remaining three notices were issued in exercise of powers under section 32(1) .and (2) of the Customs Act. According to appellant the provisions of subsections (1) and (2) of section 32 can be invoked where the importer has made a declaration and submitted a document which is false to his knowledge. Mens rea is an essential ingredient of the charge under section 32(1) and (2) of the Customs Act, 1969. These provisions cannot be invoked where the Authorities have incorrectly applied a notification.
(4) There was no misdeclaration on the part of appellant. There was no collusion between appellant and officers of Customs Department and no document filed by the appellant was found to be false to their knowledge.
(5) The three show-cause notices under section 32(1) and (2) fall out-side the ambit of relevant provisions as is evident from show-cause notice, dated 5-4-1995. The period of limitation provided for issuance of notice under section 32(3) is six months from the relevant date. At the best, it is a case of error or inadvertence or misconstruction in application of S.R.O. 484(I)/92 and therefore, the case shall fall within the scope of section 32(3) of the Customs Act, 1969 and not under subsections (1) and (2) of section 32.
(6) All the show-cause notices have been issued after expiry of relevant period of six months stipulated under section 32(3) and thus, no action could be taken in furtherance thereof.
(7) The appellant was required to describe the goods only in the Bill of Entry for the purpose of determining the correct PTC Heading for the purpose of determination of value. The decision whether the goods were entitled to exemption under any notification issued by the Government of Pakistan was the duty of Customs Authorities. Even if, the appellant filled various columns in the Bills of Entry they were not for the purpose of any declaration of fact but for the facility of the Customs Authorities. A fine distinction was attempted to be made to the effect that the claim of appellant for exemption in respect of imported goods from duties and taxes was not a declaration under section 32(2) of the Customs Act, but was merely a claim that the S.R.O. 484(I)/92 was applicable to the case and they were entitled to the benefit of exemption. The competent officer of the Customs was of the view that the said notification was applicable and granted benefit of exemption. This argument was also directed in support of plea that the case fell within the purview of section 32(3) and not under section 32(2) of the Customs Act.
14. In support of above contentions, reliance was placed on the ratio of judgments in the following cases:--
(1) Central Cotton Mills Ltd. v. Collector of Central Excise and Land Customs, 1992 CLC 841.
(2) Ibrahim Textile Mills Ltd. v. Federal Government PLD 1989 Lahore 47.
(3) Federal Government v. Ibrahim Textile Mills 1992 SCMR 1898.
(4) Muhammad Hussain v. Collector of Customs, 1991 MLD 1456.
(5) Pakistan International Airlines Corporation v. Central Board of Revenue 1990 CLC 868.
(8) A charge under section 32(2) of the Customs Act, 1969, cannot be made out unless the importer is found guilty of having deliberately and consciously made a false statement as held in the following cases:--
(6) Eastern Rice Syndicate v. Central Board of Revenue PLD 1959 SC 364.
(7) Hardeastle Waud (Pakistan) Limited v. Pakistan PLD 1962 Karachi 895.
(9) The Customs Authorities examined the location certificate and notification. Thereafter the benefit of exemption was allowed, therefore, the matter is in the nature of interpretation and application of notification which could not by any stretch of imagination be said to fall under section 32(1) and (2).
(10) The show-cause notices do not mention as to which statement a was false. The onus to prove such act is on the Customs Authorities. Reliance in this behalf was placed on the judgment of Supreme Court in the case of (i), Collector of Central Excise v. Imdad Ali 1969 SCMR 708 and (ii). Latif Brother v. Deputy Collector 1992 SCMR 1083.
(11) Objection was raised to the pecuniary jurisdiction of the Adjudicating Officer, but there is no question of law on this point therefore, this issue requires no consideration.
(12) It was contended that on merits the assertion that the Industrial Estate of the appellant is located in Chunian Industrial Estate is incorrect. The unit is located at about 37.7 KM from Octroi Post on Multan Road Lahore and thus, it is included in rural area as specified in S.R.O. 484(I)/92.
(13) Although, the stand of appellant is that the industrial unit is not located in Chunian Industrial Estate, however, if without prejudice to their stand, it is assumed that their unit falls within Chunian Industrial Estate, this fact alone is not sufficient to disentitle them from complete exemption claimed by them. Elaborate arguments were propounded which are reproduced here for the sake of convenience:--
"The exemption covers units located in:--
(a) Areas other than specified in Table-I from the whole of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969, or, as the case may be, the Sales Tax Act, 1990; and
(b) The Industrial Estates specified in Table-II from so much of the customs duty and sales tax leviable or chargeable thereon under First Schedule to the Customs Act, 1969 or as the case may be, the Sales Tax Act, 1990 as is specified in column (3) of the said Table, subject to the condition set out therein.
19.1 We now turn to the contents of Table-I and Table-II:
(i) Table-I lists three (3) areas namely, the Municipal or Cantonment Board limits of Karachi and Lahore and thirty (30) Kilometers area around these limits.
(ii) The existing limits of various Municipal Corporations etc., in the Provinces of Sindh and Punjab excluding certain areas, and
(iii) Areas falling within the limits of Islamabad Capital Territory.
19.2 Table-II sets out the lists of different Industrial Estates which are grouped into four (4) sets. The first set relates to all Industrial Estates in areas not covered by Table-I, including the Industrial Estate of Chunian. In relation to this customs duty is limited to ten per cent (10%) whereas under clause (a) in the case of an industrial unit located in an area other than Table-I there is a complete exemption from customs duty. The whole of Punjab which is more than 30 kilometers outside the Cantonment and Municipal limits of Lahore, and outside the various Municipal Corporations is excluded from Table-I, thus, on the face of it any industrial unit located in any area beyond these limits is entitled to a complete exemption. An industrial unit which is more than 30 kilometers from the limits of Cantonment Board and Municipal Corporation Lahore and is outside all other Municipal Corporation' limits, irrespective of wherever else it may be located in the Province of Punjab will -be entitled to the benefits to total exemption as it will be located in an area other than Table-I.
19.3 Now that the contents of the exemption notification have been set out in brief we can revert to clauses (a) and (b) thereof for the purpose of considering their scope and ambit. The first point to be noted is that clause (a) grants a categorical and unambiguous exemption from the whole of the customs duty and sales tax leviable on the plant and machinery imported by the units located therein. Our clients' unit is admittedly located in an area covered by clause (a) which does not fall within Table-I and, thus, on the face of it, the plant and machinery imported by them is entitled to complete exemption.
19.4 The only question is whether this complete exemption has been taken away by clause (b) or not. It must be understood that clause (b) is not a charging clause. It does not levy a duty, or tax. It, too, is an exemption clause. It should be noted that the intent underlying clause (b) is not to take away a benefit conferred on the importer but to grant him the benefit of an exemption. It does not take away what is given under clause (a) but, on the contrary, confers a further benefit, albeit, a more restricted one, on areas falling within Table-II.
19.5 The point made above may be further elucidated. If the intention of the exemption notification was to restrict the benefit conferred under clause (a) in relation to units falling under clause (b) then, it is obvious, that clauses (a) and (b) would not have been drafted in the present form but would have read as follows:--
(a) In areas other than specified in Table-I, from the whole of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969, or as the case may be, to Sales Tax Act, 1990:
Provided that in the case of units located in the Industrial Estates specified in Table-II the exemption shall be from so much of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969, or as the case may be, the Sales Tax Act, 1990 as is specified in column 3 of the said Table, subject to the conditions set out below.
19.6 In other words, clause (b) would then have been placed in the form of a proviso to clause (a), thereby making it clear that the exemption which was granted in full under clause (a) was available in a restricted shape only for units located in an Industrial Estate specified in Table-II. This is the function of a proviso... Clause (b) is not a proviso to clause (a) and both of them provide exemptions independently. In case of clause (a) the exemption is complete and in case of clause (b) exemption is limited. Both the clauses are for the benefit of industrial unit and if an industrial unit does not get any benefit under clause (a) as it may be an act specified in Table-I of the notification, it can still receive a benefit under clause (b) read with Table-II. clause (b) has not been subordinate to clause (a). "
15. Reliance was placed on the law laid down by Hon'ble Supreme Court in the case of Abdul Hadi v. Ali Haider PLD 1983 SC 342 as follows:--
"It is a cardinal rule of interpretation that all parts of an enactment are to be read together and all parts thereof given due effect and that an effort must be made to harmonise the seemingly inconsistent provisions. "
16. It was contended that the question of availability of exemption already stood resolved by the Central Board of Revenue, while interpreting similar provisions in S.R.O. 1284(I)/90 in the following words:--
"Central Board of Revenue has also been receiving individual references from the prospective investors regarding the status of industrial estates whether plant and machinery imported for areas which fall beyond the limits of areas specified in Table-I of the above mentioned Notification. This is to clarify that plant and machinery imported for the units located in industrial estates in areas beyond the limits specified in Table-I shall be eligible for exemption of customs duty, sales tax and import surcharge in terms of para. (a) of the impugned Notification. However, industrial estates located within the limits of areas appearing in Table-I shall be eligible only for concessions as indicated in Table-II of the aforesaid Notification."
17. It was alleged that the denial of exemption already allowed to the appellant would be against the consistent departmental practice which has not been approved by the Hon'ble Supreme Court in various cases.
18. It was further urged that the controversy pertaining to the payment of 10% customs duty has arisen after issuance of S.R.O. 512(I)/94, dated 9-6-1994. Prior to the amendment -inserted through this notification in S.R.O. 484(I)/92, the industrial units situated in rural areas other than those specified in Table-I as well as Chunian Industrial Estate listed in Table-II of the said notification were entitled to complete exemption from duties and taxes. Prior to the amendment inserted' by S.R.O. 512(I)/94, it was irrelevant whether the area in which the appellant's unit located fell outside Table-I of the notification or Table-II whereof. In both the cases, complete exemption was available. In this regard protection was available under section 6 of the Protection of Economic Reforms Act, 1992 which stipulates that a benefit of a concession or an exemption or a fiscal incentive given to an investor cannot be withdrawn during the period of for which it was granted. S.R.O. 484(1)/92 is a time bound notification and the benefit once extended cannot be abridged or withdrawn or taken away before June, 1995. S.R.O. 512(I)/94 insofar, it seeks to effect the right of appellant under S.R.O. 484(I)/92 is repugnant to section 6 of the Economic Reforms Act, 1992 and is void.
19. The learned Collector of Customs heard the learned Advocates for the appellant and vide order in-original, dated 14-2-2000 decided all the four cases by a common judgment.
The learned Collector held as follows:--
(1) The Ice-cream unit of the appellant is situated in Mouza Nathey Jagir which is situated within the boundaries of Industrial Estate Chunian and consequently, the industrial unit falls inside the boundary of Chunian Industrial Estate and consequently, it falls in Table (II) to S.R.O. 484(I)/92, dated 14-5-1992.
(2) The contention that the case fell within the purview of section 32(3) of the Customs Act, was repelled and it was held to be falling under section 32(2) for the following reasons:-
"The learned counsel's second argument that the notices are hit by time limitation in terms of section 32 of the Customs Act, 1969, has also been examined. The provisions of subsection (3) of section 32 covers those cases where less duties and taxes have been collected by reason of any inadvertence, error or misconstruction. The said case revolves around the misstatement of the importers in respect of the fact that their unit is located outside the Chunian Industrial Estate and falls under Table-I of the S.R.O. 484(I)/92, dated 14-5-1992. In support of this statement they had also produced disguising location certification without making any reference to Chunian Industrial Estate with clear intent to get their machinery cleared in terms of Table-I of S.R.O. 484(I)/92 with the clear intent to hoodwink the Customs official not to collect 10% customs duty as mentioned in Table-II of the said S.R.O. The importers were well aware with the fact that their unit is located inside Chunian Industrial Estate, thus, in terms of Table-II of the S.R.O. 484(I)/92 they have to pay 10% customs duty. It was for this reason that they made the statement that their unit is located outside Chunian Industrial Estate and produced Location Certificate which was nothing but to evade customs duty. Therefore, it is clearly a case of sections 32(1) and 32(2) of the Customs Act, 1969, because it is not a case of inadvertence, error or misconstruction. Without prejudice to above even otherwise in view of the Supreme Court's judgment in the case of Messrs Pfizer Pakistan Ltd. v. Federation of Pakistan PLD 1998 SC 64 an amount (tax) which is due against a party cannot be withheld. "
(3) The plea pertaining to protection under section 6 of the Protection of Economic Reforms Act, 1992, was rejected for the following reasons:--
"The respondents' main contention is that in terms of section 6 of Protection of Economic Reforms Act, 1992, and in view of the judgment of the Supreme Court in the case of Messrs Gatron Industries v. Government of Pakistan 1999 SCMR 1072 they were entitled for the exemption of the whole customs duty and sales tax has also been examined. The facts of Messrs Lever Brothers' case are not identical with the case of Messrs Gatron Industries. The area of Hub Tehsil was specifically mentioned in the Table-II of S.R.O. 1284(I)/90 whereas there is no such thing in that S.R.O. for the area of Chunnia. They have established their letter of credits for import of machinery much after the promulgation of S.R.O. 484(I)/92, dated 14-5-1992 and from the outset they stressed for the exemption in terms of S.R.O. 484(I)/92. Therefore, the question of law in this case is that whether or not the importers were entitled for the whole exemption of customs duty in terms of Table-I or chargeable to concessionary rate of 10% customs duty in terms of Table-II of S.R.O. 484(1)/92. The provisions of section 21 of the General Clauses Act, 1897 and section 30 read with section 31-A of the Customs Act, 1969, are also equally matters in the case Messrs Lever Brothers Pakistan Ltd. In the recent judgment of Honourable Supreme Court, which has been announced on 1-9-1999 in the case of Government of Pakistan v. Fecto Belarus Tractors Ltd. (Civil Appeal No..1174 of 1997) the Honourable Supreme Court has allowed the Government's appeal on the following grounds:--
"The learned Attorney General has referred to a number of cases wherein effect of section 31-A of the Customs Act has been examined by this Court and it has been held that, even if a contract has been entered into by a party upon exemption granted under section 19 of the Customs Act, 1969, no vested right would be created so as to deprive the Competent Authority from rescinding such exemption as section 31-A now clearly stipulates that any amount of duty which becomes payable in consequence of withdrawal of a concession or exemption from duty, even though such withdrawal of tax takes place after conclusion of a contract for sale of goods or opening of a letter of credit, would now be payable in terms of section 30 of the Customs Act. The said section provides that the rate and amount of duty applicable to any imported goods shall be the rate and amount chargeable on the date of the presentation of the bill of entry."
20. In the aforesaid judgment the Honourable Supreme Court while allowing the appeal of the Government has further held that:---
"It is pertinent to point out that in the case Collector of Customs v. Ravi Spinning Ltd., (1999 SCMR 412) the question as to power of the Government to impose regulatory duty under section 18(2) of the Customs Act was examined by this Court in the light of section 6 of Act XII of 1992 and the contention that the Government could not withdraw concessions or exemptions earlier allowed to the importer of goods in view of the provisions of section 6 was emphatically repelled by this Court. Consequently, in our view reference to the provisions of Act XII of 1992 appears to be completely misplaced. Equally misconceived is invocation of the doctrine of legitimate expectation by the learned Judges of the High Court as the doctrine cannot be involved to nullify effect of a legislative provision.
21. In the case of Messrs Gatron Industries 1999 SCMR 1072 also the Honourable Court has held that:--
"We are however, inclined to agree with the learned counsel for the respondents that the right to claim exemption under a notification issued under section 19 of the Customs Act, remains available to a party as long as the exemption notification holds the field, as held in the case of Messrs M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan 1998 SCMR 1404."
22. It was ultimately held that in the wake of provisions of section 30 read with section 31-A of the Customs Act, 1969 and in view of Table-II of S.R.O. 484(I)/92, dated 14-5-1992 R/W amending S.R.O. 512(I)/94, dated 9-6-.1994, all the machinery imported for installation in the Chunian Industrial Estate was chargeable to concessionary rate of 10% customs duty. The appellant was therefore, directed to make payment of the evaded amount of the customs duty as well as penalty of 10% on the evaded amount.
23. Being aggrieved, the appellant preferred First Appeals before the Customs, Excise and Sales Tax Tribunal, Karachi Bench.
24. Vide impugned order, dated 23-9-2000, the learned Tribunal held that the Industrial unit of the appellant was installed in the Industrial Zone of Chunian District Kasur.
25. While dealing with the plea regarding availability of protection under section 6 of the Economic Reforms Act, 1992, it was held that under above provisions the fiscal incentive for investor provided by the Government through the statutory orders listed in schedule or otherwise notified shall continue in force for the terms specified therein and shall not be altered to the disadvantage of the investors. It was held that after comparison of S.R.O. 1284(I)/90 specified in the schedule with the S.R:O. 484(I)/92, it was found that under S.R.O. 1284(I)/90, which provided for payment of customs duty at 3/4 of the customs duty prescribed while under S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94 the customs duty was to be paid at 10%. The result is that the customs duty provided in S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94 provides for payment of customs duty at 10%. This does not affect adversely or to the disadvantage of the investor and prescribes a larger concession, therefore, the impugned S.R.O. is not violative of the provisions contained in section 6 of the Protection of Economic Reforms Act, 1992.
26. Regarding the objection pertaining to the period of limitation in respect of the issuance of show-cause notice it was held that the declaration of the appellant that the unit would be installed in rural area was incorrect and this misstatement was not an act of inadvertence therefore, it fell within the ambit of section 32(2).
27. However, the imposition of penalty was set aside for the reason that the question involved was intricate and pertained to interpretation. There was honest litigation on the part of appellant. It was not a willful attempt with intention to evade tax liability and therefore, the penalty was not sustainable.
28. Being still dissatisfied the appellant has filed these appeals proposing the questions of law reproduced in earlier part of this judgment.
29. We have heard Ms. Sana Minhas, learned counsel for appellant and Mr. Raja Muhammad Iqbal learned counsel for the respondents.
30. Learned counsel for the appellant has reiterated the contentions raised before the lower forums, reproduced by us in the earlier part of this judgment. On the other hand, Mr. Raja Muhammad Iqbal, learned counsel for the respondents has submitted that Chunian Industrial Estate was established in the year, 1987 and under various exemption Notifications issued from time to time including S.R.O. 484(I)/92, dated 14-5-1992, it was allowed whole exemption from payment of customs duty and sales tax. He submitted that S.R.O. 484(I)/92, dated 14-5-1992. remained intact up to 8-6-1994 meaning thereby that the plant and machinery which was not manufactured locally and was imported for setting up new industrial units or for expansion, balancing, modernization or replacement of existing units to be installed in Chunian Industrial Estate enjoyed exemption from payment of whole customs duty and sales-tax. He has explained that up till 8-6-1994 there was no controversy on the point of exemption in respect of the import of plant and machinery for installation in Chunian Industrial Estate for the simple reason that under Clause (a) of S.R.O. 484(I)/92, such imports meant for areas other than specified in Table-I, enjoyed exemption from payment of whole of customs duty and sales-tax and similar was the position under Clause (b) also, wherein it was provided that the industrial estate specified in Table-II shall enjoy exemption from so much of the customs duty and sales-tax as specified in Column 3 of the said table. At Serial No.1 of Table-II certain industrial estates were specified which included Chunian and under Column No.3 exemption was available from payment of whole of customs duty and sales-tax. Thus, up to 8-6-1994 no question was ever raised about the payment of customs duty for imports of plant and machinery for the purpose of installation in Chunnia Industrial Estate. It was not considered at any level whether such imports were covered under Clause (a) or (b) or they fell in Table-I or Table-I1, because any such attempt would have amounted to academic exercise only, as in all circumstances such imports were exempt from payment of customs duty, S.R.O. 512(I)/94 was issued on 9-6-1994 whereby Table-II in S.R.O. 484(I)/92 was amended. In original Table-II, Serial No. I read as, ".Industrial Estates in areas not covered by Table-I (including Industrial Estates, Gadoon, Hattar, Chunian and Nooriabad)." Thus, all Industrial Estates situated in the area not covered by Table-1 as well as the four specified Industrial Estates enjoyed exemption from payment of whole customs duty and sales-tax. Hub Industrial Trading Estate was specified at Serial No.2 in Table-11 and exemption to imports in Hub Industrial Trading Estate was available from the customs duty in excess of 10% ad val. and whole of sales tax. By virtue of amendment inserted through S.R.O. 512(I)/94, dated 9-6-1994, the Serial No.1 read as. "Industrial Estates in area not covered by Table-I including Industrial Estates Hattar, Chunian, Hub and Nooriabad." Thus, the Industrial Estate of Gadoon was taken out of it and Industrial Estate of Hub was included in it. In respect of these four industrial estates, the exemption from payment of whole of customs duty and sales tax was withdrawn and exemption was allowed from payment of customs duty as was in excess of 10% ad val. and whole of sales tax. Para. 2 was added to Serial No. 1, wherein Industrial Estate of Gadoon was specified and the exemption was modified from whole of customs duty to customs duty in excess of 5%. Other amendments pertaining to the extent of exemptions were also made, but they are not relevant for the purpose of the issue before us in these appeals therefore, we do not propose to consider the same. Mr. Raja Muhammad Iqbal, has maintained that the Bills of Entry in the four cases under consideration were filed on 22-8-1994, 8-10-1994 and 12-10-1994. Consequently, the effective rate of customs duty, in accordance with the provisions contained in sections 30 and 31-A of the Customs Act, would be as prevailing on the date on which a Bill of Entry and Goods Declaration is manifested, notwithstanding, anything contained in any other law for the time being in force and the amount of duty payable would be as computed in consequence of withdrawal of whole or any part of the exemption or concession on duty whether before or after conclusion of contract or agreement of sale of such goods or opening of letter of credit in respect thereof. He urged that all the four Bills of Entry were filed after issuance of S.R.O. 512(I)/94, dated 9-5-1994 whereby S.R.O. 484(I)/92 was amended to the effect that imports of plant and machinery for installation in Chunian Industrial Estate shall enjoy exemption in excess of 10% of the customs duty instead of whole of customs duty.
31. He vehemently argued that a bare perusal of the Bills of Entry shows that payment from whole of customs duty and sales-tax was claimed by the appellant as per S.R.O. 484(I)/92, dated 14-5-1992. Mr. Raja M. Iqbal has argued that it is a clear misdeclaration because on the date of filing the Bills of Entry the exemption as claimed was not available under S.R.O. 484(I)/92, dated 14-5-1992 but it was available under S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94 whereby the entire Table-II was amended. The appellant was fully aware of the amendment but concealed the same in order to hoodwink and mislead the Customs official with the purpose to evade customs duty payable.
32. Mr. Raja M. Iqbal, further argued that the exemptions were allowed under S.R.O. 484(I)/92 under two categories. One pertaining to the areas other than specified in Table-I and exemption from payment of whole of the customs duty was allowed. The other category was in respect of industrial estates specified in Table-II, and the extent of exemption to the industrial estates was specified in Column N0.3. Thus, reading of clauses (a) and (b) of the opening para. of S.R.O. 484(I)/92 shows that paras (a) .pertains to installation of an Industrial Unit in an area (underlining is mine) other than specified in Table-I and when it is read with Table-1, it is found that in Column No.2 the heading is areas. Thus, the exemption covered under clause (a) is in respect of an area where there is no Industrial Estate, while through second category, described in clause (b), exemption was granted to Industrial Estates as distinguished from area and when it is read with Table-II there is a nexus in para. (b) and Table-II, in the manner that as distinguished from heading in column No.2 of Table-I, which is area, there is heading in column No.2 of Table-II as Industrial Estate. Thus, exemption under clause (a) read with Table-I was available to the installation of industrial unit in areas other than specified in Table-I, which is not in an Industrial Estate. Under clause (b), exemption was provided to all Industrial Estates as distinguished from area, not covered by Table-I including the Industrial Estates specified in column No.2 at Serial Nos. 1, 2, 3 and 4. According to Mr. Raja M. Iqbal if an industrial unit was established in an area other than specified in Table-I, where there was no Industrial Estate, the exemption was available from whole of the customs duty, but if the industrial unit was established in area other than specified in Table-I, but in an Industrial Estate it fell under second category and the exemption available was to the extent specified in column No.3 of Table-II.
33. Mr. Raja M. Iqbal, contended that the Customs, Excise and Sales-tax Tribunal, after examining the entire material has given a finding of fact that the industrial unit set up by the appellant is situated within the limits of Chunian Industrial Estate. This finding of fact has attained finality and this Court while exercising advisory jurisdiction is not competent to disturb a finding of fact, because jurisdiction of this Court is confined to give opinion on the point of law arising out of the order of Tribunal. He has maintained that this Court is required to give opinion on the point of law on the basis of the finding o1; fact given by the Tribunal. He has contended that after finding of fact that the industrial unit set up by the appellant is situated within the limits of Chunian Industrial Estate, para. (a) of the exemption clause and consequently, Table-I was not relevant at all,, for the reason that the industrial unit is situated in Industrial Estate. The question whether the Industrial Estate is situated in a rural area or at a distance of 37.7 K.M. or at any other distance is totally immaterial. The issue pertaining to the distance from the Municipal limits of Lahore shall be of significance if there is dispute on the point whether an industrial unit is situated in an area specified in Table-I, or other than specified in Table-I. Admittedly the industrial unit set up by appellant is located in the area not covered by Table-I. The material question for consideration is whether it is located at a place in such area where, there is no Industrial Estate or, is located in such area but in Industrial Estate. The point of distinction in Clauses (a) and (b) is the existence or not existence of industrial estate in an area not covered by Table-I. If it is situated within the limits of an industrial estate then the only provision applicable is as provided in Clause (b) of S.R.O. 484(I)/92 and shall fall in Table-II with the result that the exemption shall be available as specified in Column (3) of the said table. If the case of department would have been that the industrial unit of appellant was not situated in rural area but was situated in area covered by Table-I, the demand would have been for whole of the customs duty, which is not the case. Both the exemptions under clauses (a) and (b) of S.R.O. 484(I)/92 are in respect of rural areas, with the difference that the exemption under clause (a) is in respect of industrial unit located in rural area otherwise than Industrial Estate, which has been granted total exemption, while clause (b) is in respect of industrial unit located in industrial estate, situated in rural area to which exemption has been granted to the extent specified in column (3) of Table-II, under the heading "extent of exemption". He has submitted that in order to wriggle out from the consequences of misdeclaration and evasion of customs duty, the appellant has created a smoke screen by raising unnecessary and irrelevant issues, under the cover of legal jargons. He has argued that the two exemption clauses operate independently dealing with different situations and are mutually exclusive. He further contended that under Table-II, the industrial units situated within the Industrial Estate of Chunian enjoyed exemption from payment of whole of customs duty under S.R.O. 484(I)/92 up to 8-6-1994. However, with the substitution of Table-II in S.R.O. 484(I)/92 vide Notification S.R.O. 512(I)/94 the exemption was available to the customs duty as in excess of 10% ad val. He has vehemently argued that the appellant imported plant and machinery after insertion of amendment in S.R.O. 484(I)/92 through Notification S.R.O. 512(I)/94 and therefore, the exemption was available in accordance with the Table-II of the S.R.O. as existing with effect from 9-6-1994 but the appellants claimed exemption under original S.R.O. 484(I)/92 and thereby made a misstatement which is very much visible on the face of it. The exemption claimed is under S.R.O. 484(I)/92, dated 14-5-1992. The appellant was in knowledge of the fact that with the issuance of S.R.O. 512(I)/94, the Table-II stood amended and therefore, they were required to claim exemption under S.R.O. 484(I)/92 as amended vide S.R.O. 512(I)/94, dated 9-6-1994. He further submitted that the appellant made a misdeclaration in a very clandestine manner and in pursuance of a well-planned scheme. Elaborating his contention, he has submitted that the appellant was aware that the exemptions were granted in two categories. First, in respect of setting up new units and for expansion or BMR of the units which are situated in the areas other than specified in Table-I. The Second category was in respect of the industrial units specified in Table-II, i.e. in respect of Industrial Estates in areas not covered by Table-I including the Industrial Estates specified in Table-II. Thus, first category pertained to setting up of industrial unit in an area other than Industrial Estate and the second category was in respect of Industrial Estate situated in areas not covered by Table-I whether specified in Table-II or not. The intention is very clear from the language used in the notification. In order to conceal the fact that the industrial unit of the appellant was situated in the Industrial Estate of Chunian, the appellant filed declaration in all the Bills of Entry to the effect that the goods were imported for installation at 37.7 Kilometers Multan Road, Mouza N-they, Tehsil Pattoki, District Kasur. In order to further confuse and complicate the issue reliance was placed on location certificate issued by Director Industries Lahore Division and a clarification issued by C.B.R. which were not relevant. For the simple reason that the industrial unit of the appellant was not located simply in an area other than specified in Table-I but it was located in an Industrial Estate situated in the area not covered by Table-I. If the industrial unit of the appellant would have been located in the area specified in Table-I, it would not have enjoyed any exemption under S.R.O. 484(I)/92 as amended by S.R.O. 512(I/94, and if the industrial unit of the appellant would have been located in an area other than specified in Table-I, at a place other than Industrial Estate it would have enjoyed exemption from payment of whole of the customs duty and in case it was located in the area other than specified in Table-I meaning thereby the area not covered by Table-I, but in an Industrial Estate, the exemption available was as specified in Table-II. Mr. Raja M. Iqbal, has submitted that the Appellate Tribunal is the final fact-finding authority which has decided the question of fact that the industrial unit set up by the appellant is situated in Chunian Industrial Estate and this fact was fully within the knowledge of the appellant therefore, in all fairness they ought to have declared that the plant and machinery were imported for installation in Chunian Industrial Estate and should have claimed exemption as available to them under Table-II.
34. Mr. Raja M. Iqbal, has further rebutted the contention raised on behalf of the appellant that in order to avail the exemption the appellant was required to describe the goods only in the Bill of Entry and the decision whether the goods were entitled to exemption under any Notification issued by the Government of Pakistan was the duty of the Customs Authorities. He has further rebutted the contention that even if the appellant filled various columns in the Bills of Entry, they were not for the purpose of any declaration of fact but for the facility of the Customs Authorities. He has also disputed the contention raised on behalf of the appellant that the statements in the Bills of Entry in respect of claim of exemption and location were not the declaration envisaged under section 32 of the Customs Act. He has pointed out that the Notification S.R.O. 484(I)/92 itself contains that the exemptions under clauses (a) and (b) shall be subject to the conditions set out therein, including the following conditions:--
"The importer shall at the time of import of machinery make a written declaration on the Bill of Entry to the effect that the machinery has been imported for a project located in areas other than specified in Table-I or, as the case may be, for the areas specified in Table-II."
Thus, the making of declaration about the location of the area was a condition precedent for availing exemption and therefore, the declaration was not merely for the purpose of facilitating the Customs Authorities as alleged. Mr. Raja M. Iqbal, has urged that when any exemption is granted in respect of any goods subject to fulfillment of any conditions, the exemption provided for is not to operate unless the conditions are fulfilled. Before claiming benefit of exemption the conditions laid down in the exemption granting notification have to be satisfied by the person claiming the exemptions and it is to be shown that the claim strictly falls within the purview of exemption granting notification. Thus, the declarations made in the Bills of Entry by the appellant were in pursuance of the requirement of law and the appellant cannot escape the liability of making false declaration. He has submitted that the Appellate Tribunal has waived the penalty and the Department has not preferred any appeal against waiver of the penalty, therefore, he is not able to press the restoration of penalty. Otherwise even the imposition of penalty was fully justified in law.
35. Replying to the contention that mens rea is a condition precedent for invoking the provisions contained in section 32 of the Customs Act, Mr. Raja M. Iqbal has submitted that the mens rea is applicable to the charge entailing criminal and quasi criminal liability. It is not a concept of general applicability and is not attracted to strict liability cases. The concept is not applicable at all in the cases pertaining to civil liability. He has submitted that subsection (1) of section 32 defines as to when a person shall be guilty of an offence under section 32(1). It is a definition clause and the penal provision is contained in section 156. The penal provision/punishment for such offence is provided in section 156(1)(14) of the Customs Act. A person committing such offence shall be liable to a penalty not exceeding 25,000 rupees or three times the value of the goods in respect of which such offence is committed, whichever be greater and such goods shall also be liable to confiscation. This penalty and confiscation order can be passed by the Adjudicating Officer of the Customs Department in exercise of jurisdiction under section 179 of the Customs Act. In addition such person upon conviction by a Special Judge shall further be liable to imprisonment for a term not exceeding three years or to fine or to both. So far, subsections (2), (3), (3-A) and (4) of section 32 are concerned they deal purely with civil liability, of retrieval of the customs duty short-levied, non-levied or erroneously refunded in accordance with the provisions contained in these subsections and on fulfilment of the condition specified therein, within the period of limitation prescribed in law. He has submitted that since the penalty has already been waived by the Appellate Tribunal and now the issue under consideration is in respect of retrieval of the evaded customs duty which comes within the purview of civil liability therefore, the question of applicability of mens rea is not attracted at all.
36. Dealing with the contention that the concession granted under original Table-II of the S.R.O. 484(I)/92 is covered under section 6 of the Protection of Economic Reforms Act, 1992 and therefore, it cannot be taken away by subsequent amendment inserted through S.R.O. 512(I)/94. Mr. Raja M. Iqbal, has submitted that the contention is misplaced. He has pointed out that under section 6 of the Protection of Economic Reforms Act, 1992, the only Notification under Customs Act, 1969, specified in the schedule is Notification No. 1284(I)/90, dated 30th December, 1990. He has pointed out that the Appellate Tribunal has dealt with this issue in the right perspective. The industrial unit set up by the appellant is situated in Chunnia Industrial Estate and the concession available to such units under S.R.O. 1284(I)/90 was to the effect that they were required to pay customs duty at 3/4 of leviable customs duty. Under S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94, the exemption 'has been granted to the customs duty as in excess of 10% ad val and thus, not only the fiscal incentive provided in S.R.O. 1284(I)/90 has not been adversely affected but on the contrary further exemption/concession has been granted. The only restriction placed under section 6 of the Protection of Economic Reforms Act, 1992, is that the concession provided shall not be altered to the disadvantage of the investors. In reply to this contention of Mr. Raja M. Iqbal the learned counsel for the appellant submitted that she was not merely placing reliance on the S.R.O. 1284(I)/90 listed in the schedule but was further placing reliance on 'the words, "or otherwise notified" used in section 6 of the Protection of Economic Reforms Act, 1992. Replying to the contention Mr. Raja M. Iqbal submitted that the provisions contained in section 6 are available to the statutory orders listed in the schedule or otherwise notified. It denotes the Notifications other than the S.R.O. listed in the schedule on the date of coming into force of Protection of Economic Reforms Act, 1992. The protection was not available to the Notifications which were issued subsequent to the promulgation of Protection of Economic Reforms Act, 1992. In support of his contention he has taken us to the preamble of the Protection of Economic Reforms Act, 1992 which purports to provide legal protection to the reforms introduced for the purpose of savings and investments. He has further taken us to the definition of expression, `economic reforms' given in section 2(1)(b) to mean, economic policies and programmes, laws and regulations announced, promulgated or implemented by the Government on and after the seventh day of November, 1990, relating to privatization of public sector enterprises, and national banks, promotion of savings and investments, introduction of fiscal incentive for industrialization and deregulation of investment, banking, finance, exchange and payments system, holding and transfer of currencies. The words, "economic policies and programmes, laws and regulations, announced, promulgated or implemented by the Government" are clearly indicative of the fact that the protection was available to the incentives already provided through the S.R.Os. listed in the schedule to the Act or notified otherwise and the protection was not available to any subsequent incentives/exemptions which were to be governed in accordance with the provisions contained in the respective statutes. Thus, if any exemption was granted under section 19 of the Customs Act, it could be withdrawn, or varied. He has submitted that if the intention of legislature would have been to provide protection to all the fiscal incentives/ exemptions given through the S.R.Os. issued even after the promulgation of Protection of Economic Reforms Act, 1992, legislature would have defined Economic Reforms to mean economic policies and programmes, laws and regulations, announced, promulgated or implemented or to be announced promulgated or implemented at any time during the subsistence of Act and likewise would have provided in section 6; that the fiscal incentives for investors provided by the Government through the statutory orders listed in the schedule or otherwise notified or to be notified in future shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investor. The legislature has not done so and the expressions used are clearly indicative that the protection was given to the Notification/incentives already given through the S.R.Os. He has further submitted that in addition to the fact that from expression language used by the legislature in Protection of Economic Reforms Act, 1992, it cannot be gathered that the protection was provided to all the future Notifications granting exemptions/ incentives, the legislature itself has rendered the protection ineffective. Even if it is assumed for the sake of arguments only that the protection provided in section 6 of the Economic Reforms Act, 1992, is extended to future exemptions /incentives as well, the only effect is that the executive i.e. Federal Government, cannot alter it to the disadvantage of the investor. However, it could not bind the legislature itself and the legislature has added subsection (3) to section 19 of the Customs Act, by the Customs (Amendment) Ordinance, 2002, dated 7-6-2002, with retrospective effect. It is specifically stated that the amendment shall be deemed to have always been so added. Subsection (3) of section 19 reads as follows:--
"(3) Notwithstanding anything contained in any other law for the time being in force, including but not limited to the Protection of Economic Reforms Act, 1992 (XII of 1992), and notwithstanding any decision or judgment of any forum, authority or Court, no person shall, in the absence of a Notification by the Federal Government published in the official Gazette expressly granting and affirming exemption from customs duty, be entitled to or have any right to any such exemption from or refund of customs duty on the basis of the doctrine or promissory estoppel or on account of any correspondence or admission or promise or commitment or concessionary order made or understanding given whether in writing or otherwise, by any Government department or authority.
37. Mr. Raja M. Iqbal, has submitted that the above amendment came for consideration before another Division Bench of this Court in C.P. No. D-1142 of 2003. It has been held vide judgment, dated November, 23rd, 2004 as follows:--
"As is evident from a plain reading of the above provision it is evident that it would also prevail over the provisions of the Economic Reforms Act, 1992 and was designed to nullify the effect of the pronouncement of the Supreme Court in Fecto Belarus case In the instant case it is clear that even if certain vested rights have accrued to the petitioner they stood wiped out by the enactment of section 19(3) of the Customs Act. "
38. This judgment was followed in another Division Bench judgment in C.P. No.-D-1613/2001, dated December, 24th, 2004. He has produced another Division Bench judgment of this Court, dated 14-12-2004 in C.P. No.D-774 of 2004, wherein similar view has been taken with reference to the identical amendment inserted in section 6 of the Sales Tax Act, 1990.
39. Lastly, Mr. Raja M. Iqbal, has submitted that penalty levied under section 32(1) R/W section 156(1)(14) has been deleted and the sole question requiring consideration pertains to the recovery of customs duty which was not levied on account of misdeclaration made by the appellant, which falls within the purview of section 32(2) of the Customs Act, which prescribes a limit of three years and therefore, the show-cause notices issued were within period of limitation. He has supported the finding of the Appellate Tribunal that the show-cause notices were not barred by time and therefore, the demand for payment of customs duty is not open to any exception.
40. We have carefully considered the contentions raised by the learned Advocates for the parties and the material placed on record.
41. The first question requiring consideration is location of the industrial unit set up by the appellant. According to appellant the industrial unit is situated at a distance of 37.7 Kilometers from the Municipal limits of Lahore in Mouza Nathey Jagir, Tehsil Pattoki, District Kasur, which is a rural area and is not covered by the areas specified in Table-I of S.R.O. 484(I)/92. The case of department is that of course, the industrial unit set up by the appellant is situated in Mouza Nathey Jagir Tehsil Pattoki District Kasur, but it is within the boundary of Industrial Estate Chunian. The Appellate Tribunal after examination of the entire facts alleged and scrutiny thereof has held that the industrial unit set up by the appellant is situated within the boundaries of Industrial .Estate Chunian. We are persuaded to agree with the contention of Mr. Raja M. Iqbal, learned counsel for the Customs Department that it is entirely a question of fact and the Appellate Tribunal is a final fact finding authority. This Court while exercising advisory jurisdiction in tax matters shall express its opinion on the basis of facts as determined by the Tribunal. The appeal/reference to High Court lies on the point of law arising out of the order of Tribunal and therefore, it is settled law that the finding of facts given by the Tribunal shall be final, not open to further examination/scrutiny by this Court and the opinion in exercise of advisory jurisdiction shall be given on the basis of facts as determined by A the Tribunal. This settled proposition of law has been reiterated by a Division Bench of this Court in a judgment authored by one of us (Muhammad Mujeebullah Siddiqui), in the case of Iram Ghee Mills (Pvt.) limited v. Customs, Central Excise and Sales Tax (Appellate) Tribunal, 2004 PTD 559. It would be appropriate to reproduce the observation which reads as follows:--
"Mr. Shaiq Usmani, learned counsel for the appellant has frankly conceded to the proposition of law that the finding of facts given by the Tribunal are final and while exercising appellate jurisdiction under section 196 of the Customs Act, 1969, this Court can decide the question of law arising out of the order of Tribunal and can deliver decision thereon. The finding of facts given by the Tribunal cannot be disturbed by this Court in exercise of advisory jurisdiction under section 196 of the Customs Act, 1969.
42. As already observed, the Appellate Tribunal has decided the question of fact about location of industrial unit set up by the appellant to the effect that it is situated within the limits of Chunian Industrial Estate. We therefore, propose to consider the questions of law on the basis of fact that the industrial unit set up by the appellant is located within the limits of Industrial Estate Chunian. The Second point requiring consideration is whether the imports under consideration are covered, under clause (a) of the exemption notification S.R.O. 484(I)/92 or under clause (b) thereof. The above clauses have already been reproduced in earlier part of this judgment while narrating the arguments advanced on behalf of the appellant. It is contained in clause(a) that the Federal Government was pleased to exempt such plant and machinery as is not manufactured locally and is imported during the period commencing on the 1st December,, 1990 and ending on 30th June, 1995 for setting up new unit and for expansion, balancing, modernization and replacing of existing units in areas other than specified in Table-I from whole of the customs duty and sales-tax leviable or chargeable thereto. Under First Schedule of the Customs Act, 1969, or as the case may be the Sales Tax Act, 1990.
43. According to the clause (b) the exemption is in respect of the import of plant and machinery for the industrial estates specified in Table-II from so much of the customs duty and sales tax leviable or chargeable thereon under the First Schedule of the Customs Act, 1969, or as the case may be the Sales Tax Act, 1990, as is specified in Column (3) of the said table. A very lengthy arguments have been addressed on the point whether the industrial unit of the appellant falls in Table-I or Table-II of S.R.O. 484(I)/92. However, we are of the opinion that it is merely hairsplitting and Mr. Raja M. Iqbal, has rightly argued that the scope of arguments has been unnecessarily widen so as to make the point under consideration obscure, thereby confounding issue. We are persuaded to agree with the submission of Mr. Raja M. Iqbal, that the appellant and the Customs Department both agree that the industrial units set up by the appellant is situated in rural area and not within the area specified in Table-I. We are further persuaded to agree with the submission of Mr. Raja M. Iqbal, that a perusal of S.R.O. 484(I)/92 shows that according to it the import of plant and machinery for setting up industrial units, fall within three categories.
44. The first category is in respect of the areas specified in Table-I and the imports for the areas covered by Table-I do not enjoy any exemption under this S.R.O.
The second category is in respect of the imports of plant and machinery for the industrial units situated in the areas other than specified in Table-I but not located in an Industrial Estate and such 13' imports enjoy exemption from payment of the whole of customs duty.
The third category is for import of plant and machinery for the industrial units again situated in the areas not covered by Table-I, i.e. rural areas, but located in Industrial Estates specified in Table-II and such imports enjoy exemption from so much of the customs duty as is specified in Column (3) of the second table.
The first category is not relevant at all for the purpose of these appeals. The point for determination is whether the imports made by the appellant fall within category two or three. In other words, in clause (a) or (b) of S.R.O. 484(I)/92, having the consequence of enjoying exemption from payment of whole of the customs duty or exemption to the extent specified in column (3) of Table-II. For this purpose the point of distinction is not whether the industrial unit is situated in urban area or rural area but as rightly argued by Mr. Raja M. Iqbal the point of distinction is whether the industrial unit is situated in the rural areas simplicitor or is situated in an industrial estate in the rural area. In the first situation there is a total exemption while in the second situation the exemption is to the extent specified in Column (3) of Table-II. After finding of fact by the Tribunal to the effect that the industrial unit set up by the appellant for which the plant and machinery were imported is situated in Industrial Estate Chunian, which is final finding of fact, we feel no hesitation in holding That the case of appellant is covered by the exemption allowed under clause (b) R/W Table-II of the S.R.O. 484(I)/92.
45. At this stage, we would like to hold that, we do not find any relevance in the contention raised on behalf of appellant that the exemption granted under clause (a) has not been taken away by clause (b). The entire gamut of arguments on this point is based on the wrong premises that the exemption granted under clauses (a) and (b), are in respect of similar set of facts and there is any overlapping or inconsistency in the two clauses. Further arguments to the effect that clause (b) of the exemption notification has not restricted the benefit conferred under clause (a) and if the intention would have been to that effect, the clause (a) would have been drafted differently and with a proviso are also fallacious and are based on incorrect reading of the exemption notification. We find that on behalf of appellant reliance has been wrongly placed on the law laid down by the Hon'ble Supreme Court in the case of Abdul Hadi v. Ali Haider PLD 1983 SC 342, to the effect that, "It is cardinal rule of interpretation that all parts of an enactment are to be read together and all parts thereof given due effect and that an effort must be made to harmonise the seemingly inconsistent provisions. "
Reliance has been placed on the above dictum on the premises that there is any inconsistency in clauses (a) and (b) of the exemption notification. We fully agree with the submission of Mr. Raja M. Iqbal, that neither there is any inconsistency in clauses (a) and (b) of the exemption notification nor there is any overlapping. The two clauses operate independently, dealing with different situations and are mutually exclusive. Through clause (a), exemption has been allowed to the industrial units installed in the areas other than specified in Table-I and clause (b) deals with the exemption granted to the industrial units situated in the Industrial Estates in the same area and including the industrial estates specified in Table-II.
46. The learned counsel for the appellant has further placed reliance on the interpretation given by the C.B.R. in respect of the queries made in respect of exemption granted by S.R.O. 1284(I)/90. In the first instance, we are of the opinion that the C.B.R. has no place in the scheme of law, conferred with the jurisdiction to interpret any law, statutory or in exercise of delegated authority, i.e. subordinate legislation. The point in issue already stands decided by the Hon'ble Supreme Court in the case of Central Insurance Company, 1993 PTD 766. Secondly the clarification issued by C.B.R. in its letter, dated 14-1-1991 with reference to exemption granted under S.R.O. 1284(I)/90 is not relevant to the S.R.O. 484(I)/92. The learned counsel for the appellant has wrongly alleged that the exemption granted in the two notifications referred to above are similar. A careful examination of the two exemption notifications shows that vide S.R.O. 484(I)/92 exemption has been granted vide clause (a) to the industrial units located in the areas other than specified in Table-I and through clause (b) exemption has been granted to the industrial units located in the Industrial Estates situated in the areas other than specified in Table-I and the Industrial Estates specified therein. The distinction in these two clauses has been dealt with elaborately in the earlier part of this judgment therefore, we need not to repeat the same. So far, S.R.O. 1284(I)/90 is concerned, the exemptions were granted both under clauses (a) and (b) with reference to the areas specified in Tables-I and II and not with reference to area and Industrial Estate distinguished from each other. The clarification issued by the C.B.R. was in respect of an industrial unit situated in S.-I.T.E. Nooriabad, which was situated in the area other than mentioned in Table-I and it was not specifically mentioned in Table-II.
47. The next point requiring consideration is whether imports made by the appellant were governed by the exemption granted under S.R.O. 484(I)/92, dated 14-5-1992 or under the S.R.O. as amended by S.R.O. 512(I)/94, dated 9-4-1994. It is admitted fact that all the imports were made after the substitution of Table-II, by Notification S.R.O. 512(I)/94. The learned counsel for the appellant is not able to show that except for the protection sought under section 6 of the Protection of Economic Reforms Act, 1992, there was any other law under which the claim under unamended S.R.O. for exemption was still available, even after substitution of Table-II of the exemption Notification through S.R.O. 512(I)/94. We find substance in the E contention of Mr. Raja M. Iqbal, that prior to the issuance of S.R.O. 512(I)/94, dated 9-6-1994, there was no controversy about the availability of exemption from payment of whole of the customs duty and the issue cropped up with effect from 9-6-1994, when Table-II in the exemption notification was substituted. We further find force in the contention of Mr. Raja M. Iqbal, that by virtue of the provisions contained in sections 30 and 31-A of the Customs Act, the effective rate of duty shall be as in force when the Bill of Entry or goods declaration is presented. It is therefore, held that the issue pertaining to the exemption available to the appellant was to be governed under S.R.O. 484(I)/92 as it stood after amendment by S.R.O. 512(I)/94 and not in accordance with the exemption available under S.R.O. 484(I)/92, dated 14-5-1992 which was in force up to 8-4-1994.
48. This brings us to the question whether the appellants have made a misdeclaration in the Bills of Entry. It is admitted fact that the appellant claimed exemption under S.R.O. 484(I)/92, dated 14-5-1992. It is also admitted fact that on the date of filing of Bills of Entry the exemption Notification S.R.O. 484(I)/92 as issued on 14-5-1992 was no more in the field but the exemption notification occupying the field and applicable to the imports made by the appellant was S.R.O. 484(I)/92 as amended by S.R.O. 512(I)/94, dated 9-6-1994. A claim of exemption under the original exemption notification was therefore, a clear misdeclaration and incorrect statement. The Appellate Tribunal has finally decided the question of fact that the industrial unit of the appellant is situated in the Industrial Estate of Chunian. It is also admitted fact that the appellant filed declaration to the effect that, "the goods imported will be installed at 37.7 K.M. Multan Road, Monza Nathey Jagir, Tehsil Pattoki, District Kasur", without disclosing that it was situated in the Industrial Estate Chunian. We are persuaded to agree with the submission of Mr. Raja M. Iqbal, that it is a clear concealment of fact amounting to misdeclaration in a very clever and clandestine manner giving impression as if the industrial unit of the appellant is situated in a rural area simplicitor, although the appellant was required to disclose in the written declaration in pursuance of the condition precedent in terms of exemption notification that the industrial unit was situated in the areas specified in Table-II. At this stage, we will examine the contention on behalf of appellant that for the purpose of availing exemption the appellant was required to give declaration in respect of goods only and was not duty bound to declare the exact location of the place of installation of plant and machinery and that the Columns in this behalf were filled-in for the convenience of the Customs officials and not in compliance of the legal requirement. Mr. Raja M. Iqbal, has pointed out that the declaration about the exact place of the installation of plant and machinery was the requirement of law being condition precedent specified in the exemption notification itself and was not a matter of convenience for the Customs officials. We fully agree with the contention of Mr. Raja M. Iqbal.
49. It has been contended on behalf of appellant that any misdeclaration in respect of goods attracts the provisions contained in section 32 of the Customs Act, and if there is any non-declaration or any incorrect declaration in respect of any other matter it does not bring the case within the parameters of section 32 of the Customs Act. We do not find any substance in the contention for the reason that it is provided in subsection (1) of section 32, that if any person, in connection with any matter of customs makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of Customs any declaration, notice, certificate or other document whatsoever, knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under section 32. The words and expressions used by the Legislature are comprehensive enough to cover any incorrect declaration or information in any document in connection with the matter of customs having the effect of causing loss to revenue. It is not confined to the declaration/statement in respect of goods only. In the present case, the exemption could be claimed if the goods imported were plant and machinery not locally manufactured and further if it was intended to be installed at the places specified in the exemption notification and the availability of exemption was contingent on filing of declaration showing the location of the industrial unit.
50. For the above reasons, we are fully satisfied that the appellant made a misstatement/misdeclaration attracting the provision contained in section 32.
51. This brings us to the contention that mens rea is required to be established for the purpose of attracting the provisions contained in section 32 of the Customs Act. In all the four appeals before us, the Appellate Tribunal has already waived the penalties and therefore, the issue for consideration is confined to the retrieval of customs duty which was not levied on account of misdeclaration made by the appellant. We find force in the contention of Mr. Raja M. Iqbal, that mens rea is a concept which is applicable to the criminal administration of justice in H the cases other than strict liability matters. Mere retrieval of the customs duty is a matter of civil liability and therefore, the concept of mens rea, i.e., guilty mind, is not attracted. This point has been examined by another Division Bench of this Court in the judgment authored by one of us (Muhammad Mujeebullah Siddiqui) in the case of Iram Ghee Mills (Pvt:) Ltd. v. Customs, Central Excise and Sales Tax Appellate Tribunal, 2004 PTD 559. For the sake of convenience the relevant finding in the earlier decision is hereby reproduced:--
"The next question which requires consideration is, as to what consequences follow from the bringing home of the guilt to the appellant in respect of the offence defined under section 32(1) of the Customs Act, 1969. It would be appropriate to reproduce section 32 and section 156(1)(14) of the Customs Act, 1969, which read as follows:--
"32. Untrue statement, error, etc. (1) If any person, in connection with any matter of customs:--
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of Customs any declaration, notice, certificate or other document whatsoever, or
(b) makes any statement in answer to any question put to him by an officer of Customs which he is required by or under this Act to answer.
Knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that -account shall be served with a notice within five years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or mis construction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.
(3A) Notwithstanding anything contained in subsection (3), where any duty or charge has not been levied has been short-levied or has been erroneously refunded and this is discovered as a result of an audit or examination of an importer's accounts or any means other than an examination of the documents provided by the importer at the time the goods were imported, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.
(4) The appropriate officer, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him which shall in no case exceed the amount specified in the notice and such person shall pay the mount so determined.
(5) For the purposes of this section, the expression "relevant date" means:--
(a) in any case where duty is not levied, the date on which an order for the clearance of goods is made;
(b) in case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessment;
(c) in a case where duty has been erroneously refunded, the date of its refund;
(d) in any other case, the date of payment of duty or charge."
Section 156(1) (14)
" 14, If any personSuch person shall be liable to penalty
commits an offencenot exceeding twenty-five thousand
under section 32.rupees or three times the value of the goods in respect of which such offence is committed; whichever be greater; and such goods shall also be liable to confiscation; and upon conviction by a Special Judge, he shall further be liable to imprison ment for a term not exceeding three years, or to fine, or to both."
A perusal of section 32 shows that subsection (1) contains the definition of the offence constituted on account of making misdeclaration or misstatement in connection with any matter of Customs. Subsection (2) of section 32 takes care of retrieving the State revenue and provides complete mechanism including the procedure and the period of limitation within which a duty or charge can be recovered which was not levied or was short levied or was erroneously refunded. The language of subsection (2) is very clear to the effect that mere misdeclaration or misstatement or a collusion between the person making misdeclaration or misstatement and Customs official is sufficient per se for making good the loss caused to the State revenue. No question of any guilty mind or mens rea is involved.
Subsection (2) of section 32 has although nexus with sub-section (1) but to the extent of misdeclaration/misstatement only and is not contingent upon commission of offence defined in subsection (1), because for the purpose of constituting offence, which by its very nature is quasi-criminal or criminal, it is necessary that there should be material available with the Customs Authorities to the effect that the misdeclaration/ misstatement was made with the knowledge or by having reason to believe that such document or statement is false. No such condition is attached for invoking the provisions contained in subsection (2) and as already observed mere misdeclaration or misstatement without commission of offence is sufficient.
So far, subsection (3) is concerned, it solely deals with the retrieval of tax and thus takes care of loss of revenue suffered by the Customs Department not on account of any misdeclaration or misstatement but on account of inadvertence, error or misconstruction either on the part of assessee or Customs officials. Thus, although subsection (3) is part of section 32 but it has no nexus with subsection (1) of section 32. It is totally independent provision and for invoking this provision no misdeclaration or misstatement is required to be shown.
Likewise subsection (3A) also has no nexus with the provisions contained in subsection (1) and caters entirely different situation. The invocation of subsection (3A) preconceives the discovery of any short-levy, non-levy or erroneous refund on account of or as a result of audit or examination of any imports account or by any means other than examination of the documents provided by the importer at the time-of import of the goods. Subsection (4) is merely procedural in nature which is meant for giving a right of hearing to a person to whom the show-cause notice has been issued under subsection (2) or subsection (3) and further restricts the discretion of the appropriate officer that the duty payable shall not exceed specified in the notice.
Thus, it is clear that subsections (2)(3) (3A) and (4) revolve around loss of revenue. The proceedings envisaged under these subsections are purely civil in nature and deal with the fiscal I consequences on account of the acts/omission specified in subsections themselves. The observations contained in the two earlier judgments of this Court in the case of Kamran Industries v. Collector of Customs and Messrs Al-Hamd Edible Oil v. Collector of Customs should be read in the above context. Some misconception appears to be prevailing about the nature of provisions contained in section 32 and, therefore, the above clarification was required.
As already observed subsection (1) of section 32 defines the offence of misdeclaration/misstatement in connection with the matter of customs and an offence is always quasi-criminal/ criminal in nature. For establishing an offence which is quasi criminal/criminal in nature the presence of guilty intent/mens rea is required to be established until and unless there is a case of absolute statutory liability where no mens rea is required to be proved. The quasi-criminal/criminal liability consequent to the commission of offence defined under subsection (1) of section 32 is not dealt with in other subsections of section 32 but has been provided in clause (14) of section 156(1) of the Customs Act, 1969. The relevant provision has been reproduced in the earlier part of this judgment. A perusal of columns Nos.1 and 3 shows that it pertains to the commission of offence under section 32. A perusal of column No.2 shows that the consequences provided are three fold. First, a person committing an offence under section 32(1) shall be liable to the penalty specified therein, secondly, the goods in respect of which the offence has been committed are liable to be confiscated and thirdly, there is a purely criminal liability to the effect that upon conviction by a Special Judge the person committing the offence shall further be liable to imprisonment for a term not exceeding three years or tine or to both. The liability of imposition of penalty and confiscation of goods can be resorted to by an appropriate officer of the Customs under section 179 of the Customs Act, while the conviction and sentence for imprisonment and/or fine can be awarded by the Special Judge Customs appointed under section 185 of the Customs Act, 1969. The ratio of the judgment of the Hon'ble Supreme Court in the case of Hardcastle is applicable to the imposition of penalty and confiscation of goods only as at the relevant time the criminal liability was not provided in law.
Thus, the liabilities provide in clause (14) of section 156(1) of the Customs Act, 1969 on commission of offence under section 32(1) are totally independent of the fiscal measures provided in subsections (2) (3) (3A) (4) and (5) of section 32.
To summarise the above discussion, it is concluded that subsection (1) of section 32 defines the offence committed on account of misdeclaration/misstatement in connection with any matter of the customs. Subsection (2) of section. 32 is to be invoked in consequence of a misdeclaration/misstatement only. This provision can be invoked without establishing the commission of offence on account of misdeclaration/ misstatement.
Subsections (3)(3A) have no nexus with subsection (1) of section 32. Subsections (4) and (5) are procedural in nature and contain parameters within which the orders under subsection (2) and subsection (3) of section 32 can be made. The consequences of commission of penal offence are provided in clause (14) of section 156(1).
For the purpose of imposing penalty and confiscation of goods no specific finding by the appropriate officer of Customs on the point of mens rea is required. If it can be gathered from the material available with the Customs Authorities it shall fulfil the requirement of law. However, for the purpose of conviction by a Special Judge and thereby imposition of sentence of imprisonment and fine a specific finding on the point of mens rea is required to be given failing which the criminal liability or conviction and fine shall not be sustained. At this point it is also appropriate to point out that, the officers of the Customs Department can confiscate the goods and levy the penalty while the Special Judge can award the sentence and imprisonment and fine. The imposition of penalty is not a criminal liability and does not carry any stigma while the imposition of fine on conviction is purely criminal liability and carries a stigma with it. Thus, keeping in view the difference between the proceedings by Adjudicating Officer of the Customs Authorities under section 179 of the Customs Act, which is not purely criminal in nature and the proceedings before a Special Judge appointed under section 185 of the Customs Act, which is purely criminal in nature, the standard of the burden of proof shall not be the same. The issue has already been discussed in detail and requires no further elaboration."
52. Respectfully following the earlier decision of this Court, it is held that the concept of mens rea is not applicable to the proceedings under subsections (2)(3)(3A). The concept of mens rea is not attracted because these provisions deal with the civil liability. In the present case also the questions referred to us are in respect of proceedings initiated under section 32(2)(3) of the Customs Act, therefore, the contention raised on behalf of appellant pertaining to absence of mens rea (guilty intent) is misplaced.
53. Now we take up the plea that the exemption granted under original exemption notification, dated 14-5-1992 is protected under section 6 of the Protection of Economic Reforms Act, 1992, which could neither be withdrawn nor altered to the disadvantage of the appellant during the period specified in the Notification.
54. In view of the insertion of subsection (3) in section 19 of the Customs Act, 1969, by Amendment Ordinance XXIV of 2002, dated 7-6-2002 with retrospective effect, we need not to dilate on the other contentions raised by Mr. Raja M. Iqbal, in this behalf. As referred to earlier, the impact of the newly-inserted provisions already stands decided to various judgments delivered by two Division Benches of this Court. It has been held that the provisions contained in subsection (3) of section 19 of the Customs Act, would prevail over the provisions of Protection of Economic Reforms Act, 1992, we are in respectful agreement with the view expressed in the earlier Division Bench judgments of this Court on which Mr. Raja M. Iqbal, has placed reliance and therefore, it is held that on account of retrospective insertion of subsection (3) in section 19 of the Customs Act, the protection claimed by the appellant under section 6 of the Protection of Economic Reforms Act, 1992 is no more available.
55. It has been contended on behalf of appellant that they are placing reliance on a notification published in the official Gazette therefore, the bar contained under section 19(3) of the Customs Act, is not attracted and the Protection of Economic Reforms Act, 1992, is still applicable. It is further contended that where a vested right is effected by any retrospective promulgation of law, the rule of strict construction of statute is to be adopted. We do not find any substance in the contention because at the time of filing the Bills of Entry, Table-II of S.R.O. 484(I)/92, dated 14-5-1992 was already amended through S.R.O. 512(I)/94, dated 9-6-1994, whereby the exemption from the payment of whole customs duty was withdrawn and the exemption was allowed from payment of customs duty as was in excess of 10% ad valorem. Consequently, the exemption from payment of whole of the customs duty was being claimed in the absence of notification in this behalf. Once any S.R.O. is rescinded, withdrawn, altered, amended or substituted then to the extent of withdrawal, alteration, amendment or substitution the earlier notification wholly or partially as the case may be does not remain operative and is to be treated as absent. So far, the jurisdiction of Legislature to make any retrospective amendment in law, even to the disadvantage of beneficiary is concerned, it stands settled that such jurisdiction is vested in the Legislature. It is further contended that notwithstanding, the retrospective amendment nullifying the effect of judgment in the case of Fecto Belarus Tractors Ltd. v. Pakistan 2001 PTD 1829, the rule laid down by the Supreme Court in the case of Messrs, Gatron Industries Ltd., 1999 SCMR 1072, continues to be applicable to the imports made by the appellant for the reason that in the case of Fecto Belarus Tractors Ltd., reliance was placed on the principle of promissory estoppel contained in the Letter of Authorization while in the case of Gatron Industries Limited, reliance was placed by the parties on Gazette Notification as in the present case. We are not impressed with the contention for the simple reason that with the insertion of subsection (3) in section 19 of the Customs Act, with retrospective effect, the Protection available under section 6 of the Protection of M Economic Reforms Act, 1992, has been nullified irrespective of the fact whether the reliance was being placed on a notification or on the principle of promissory estoppel contained in the Letter of Authorization or in any other document or law.
56. In the alternative it has been contended that even if the effect of newly-added subsection (3) of section 19 is that the protection available under section 6 of the Protection of Economic Reforms Act, 1992, has been nullified the bar is not applicable to the case under consideration, in view of the judgment of Supreme Court in the case of Molasses Trading Limited, 1993 SCMR 1905, wherein it has been held that the retrospective application of a law is not extended to past and closed transactions. In Molasses Trading Ltd., case it has been held by the Hon'ble Supreme Court that retrospective effect cannot be given to a law so as to effect past and closed transactions. It was observed in this case with reference to section 31-A of the Customs Act, that section 31-A was inserted on 1-7-1988 while the Bills of Entry were presented before 1-7-1988 and therefore, the cases were past and closed transactions and were not hit by section 31-A. It is further contended that in the present appeals all Bills of Entries were presented in the year, 1994 much prior to the promulgation of section 19(3). It has been submitted that although it is not clear from the Molasses Trading Limited case whether the limitation period for issuance of a show-cause notice had expired, however, considering the fact that the Supreme Court delivered a lengthy judgment, it is obvious that the period of limitation for issuance of a show-cause notice had not expired. It has been submitted that had the period of limitation for issuance of show-cause notice expired, then the Supreme Court in Molasses Trading Ltd., case would have allowed the appeals simply on the point of limitation and would not have allowed the appeals on merit, as to do so would have been an academic exercise and it is well-settled that the apex Court does not enter into academic exercise. After very careful consideration of the contentions raised, we regret our inability to agree with the proposition. The contention appears to be highly presumptive and too far-fetched. It is manifestly against the trite concept of the past and closed transactions. A transaction becomes past and closed when it attains finality meaning thereby that it cannot be reopened. After a matter is decided by a particular forum and within the period of limitation no appeal, revision or petition, as the case may be, is filed within the specified period, it shall be deemed to have attained finality and attained the status of past and closed transaction. However, if any appeal, revision or petition is filed then until and unless the matter is decided by the highest forum it shall not become past and closed transaction. The pending proceedings can never be held to be final and falling within the category of past and closed transaction. Likewise, if any matter pertaining to the evasion of tax on account of non-levy or short-levy of tax or non-payment thereof can be reopened within the period of limitation provided in law then it cannot be treated as past and closed transaction, if it is reopened within the period of limitation provided in law. If the case is not reopened within the period of limitation then on expiry of such period it shall attain the status of past and closed transaction and in case it is re-opened within the period of limitation, then it becomes past" and closed transaction, after final adjud1ication. We will examine this aspect further while discussing the last contention on behalf of the learned counsel for appellant pertaining to the issuance of show-cause notices under section 32 with reference to the period of limitation.
57. The last contention raised by the learned counsel for the appellant in their written arguments is that the appellant got the goods cleared after claiming the goods exempt from duty under the amended S.R.O. 484(I)/92. This assertion is factually incorrect and amounts to a glaring misstatement before this Court. This version is contradictory to the contents of Bills, of Entry which have been reproduced in earlier part of this judgment. It is further contended in the same sequence that the case was covered under section 32(3) as it was the result of error or mis construction on the part of Customs officials. The contention is without substance, because the exemption was allowed on account of clear mis statement and misdeclaration in the Bills of Entry as already discussed and, therefore, it is held that the case of appellant is covered under section 32(2) of the Customs Act. It is next alleged that show-cause notices issued are defective, and therefore, because of the vagueness of the show-cause notices the appellant was denied the opportunity to reply and rebut the allegations made against him. Although show-cause notices issued are short and are not detailed but the plea that appellant was denied the opportunity to reply and rebut the allegations against it, is without substance. The appellant knew reasons for issuance of show-cause notice from the very beginning and submitted a detailed reply spreading over 45 pages.
58. However, it is not the end of matter. The reason being that the service of the notices under subsections (2)(3) and (3-A) within the period of limitation specified in the section is condition precedent for acquiring jurisdiction to re-open such cases. It is pertinent to note that subsection (1) of section 32 merely contains definition of the offence under section 32 and does not speak of service of any notice for the purpose of initiating proceedings under section 32(1) and likewise no such notice is prescribed under section 156(1)(14) of the Customs Act. The reason bring that service of notice or period of limitation are the attributes of the proceedings entailing civil liability. Service of notice or period of limitation are not normally attributes of criminal proceedings entailing criminal liability. However, we will hasten to add that no charge is framed in the adjudication proceedings conducted under section 179 Customs Act involving liabililty of penalty and confiscation, therefore, notice containing sufficient details is always necessary in respect of proceeding under section 32(l) as well. The proceedings envisaged under subsections (2) (3) and (3-A) of section 32 are civil in nature pertaining to the retrieval of the loss of tax. It is therefore, particularly provided in all the above three subsections, that the person liable to pay any amount shall be served with a notice within the period of limitation provided in the subsections. The show-cause notices required to be served under the above subsections are jurisdictional in nature. For the purpose of retrieval of the losses envisaged under the above sections the service of notice gives the jurisdiction and absence of appropriate/relevant notice under the specific provision shall render the entire proceedings without jurisdiction. In the narrative part of the judgment we have observed that show-cause notices in all the four cases were issued through stereotyped pro formas by filling in the blanks meant for issuance of notices under subsection (3) of section 32 of the Customs Act, 1969. Two notices, dated 14-5-1995 and one notice, dated O 13-5-1995 were issued by the Assistant Collector of Customs (Appraisement) Mr. Jawaid Ovais Agha and he was vigilant enough to score off subsection (3) and insert subsection (1) and (2) in its place. However, in the notice, dated 5-4-1995 no such vigilance was shown and the notice was issued under subsection (3) of section 32 of the Customs Act, 1969. We had observed that the .effect of negligence on the part of officer issuing notice, dated 5-4-1995 shall be considered at later stage.
59. We have already held that on account of misstatement/mis declaration made by the appellant and consequential, non-levy of customs P duty, the case fell under subsection (2),of section 32. In the year, 1995 the period of limitation for issuance of notice under section 32(2) was three years while the period of limitation for issuing show-cause notice under subsection (3) was six months. Admittedly the two notices 14-5-1995 and one notice, dated 13-5-1995 under subsections (1) and (2) Q of section 32 were issued before the expiry of three years of the relevant date i.e. on which the order for the clearance of goods was made and consequently it is held that these three show-cause notices are within time. So far, the notice, dated 5-4-1995 is concerned, it was issued within the period of six months from the date of clearance of the goods and therefore, no objection can be raised on the point of limitation, but still we find that this notice is defective. The reason being that it was required to be issued under subsection (2) of section 32 and not under subsection (3) of section 32 as already held, because it was not a case of non-levy of tax on account of any inadvertence, error or mis construction but it was a case of non-levy of tax on account of mis statement/misdeclaration in the Bill of Entry. We have already held that service of notice under, appropriate provision of law is, condition precedent for acquiring the jurisdiction. The show-cause notice being jurisdictional in. nature, the absence whereof makes the entire proceedings without jurisdiction. It is therefore, held that the proceedings in respect of Bill of Entry, dated 8-10-1994 subject-matter of Special Customs Appeal No. 122 of 2000 was without jurisdiction. Consequently, the demand raised in this case is held, to be void and not enforceable in law.
60. In order to remove the possibility of any confusion or misunderstanding, we would like to clarify that if a notice under subsection (2) of section 32 is issued, but ultimately it is found that the case was covered under subsection (3), no further notice is required to be issued under subsection (3) on the principle that a lesser charge, liability or allegation was always deemed to be a part of higher charge, liability or allegation, provided the notice is served within the period of limitation specified in subsection (3). If a notice is served under subsection (2) and the case is found to be covered under subsection (3) but it is served beyond the period of limitation specified in sub-section (3), the entire proceedings shall be rendered void being without jurisdiction. However, if notice is served under subsection (3) within the period specified in this subsection or beyond such period but within the period specified in subsection (2) and the case is found to be covered under subsection (2) such a notice shall not clothe the Adjudicating Officer with jurisdiction. The proceedings shall be void for want of service of notice of proper jurisdictional nature. The reason being that in the proceedings under subsection (3) no allegation or charge is required to be levelled against an assessee. The loss of revenue which is required to be retrieved is occasioned on account of mere inadvertence, error or misconstruction on the part of assessee or the Customs officials, attributing no culpability on the part of assessee. He is therefore, not required to furnish any explanation with regard to the misstatement or misdeclaration. Subsection (3) does not cover any case of misstatement or misdeclaration. At the most, it will cover the case of honest difference of opinion or genuine interpretation, though it may ultimately be found to have been raised on account of any error of Judgment or misconstruction or inadvertence and thus, not acceptable to the departmental officers and even by the superior Courts. On the other hand, jurisdiction under subsection (2) is dependent on allegation/charge of misdeclaration/misstatement which is required to be explained by the assessee. The converse principle is applicable to such case which is to the effect that the higher offences are never treated to be the part of offences/acts of lower magnitude. The cases covered under sub-section (2) though are confined to civil liability but, of the higher magnitude, as compared to the cases covered under subsection (3). For this reason the period of limitation specified in subsection (2) 'is more than the period specified in subsection (3). Consequently, a notice under subsection (3) shall not confer jurisdiction to proceed, with the cases covered under subsection (2): but vice versa is permissible.
61. Consequent to the above findings, the common Questions Nos.1, 2 and 3 in all the four appeals are answered in negative. Question No.4, in Appeal No. 122 of 2000 is answered in affirmative. Common question No.4 in Appeals Nos. 123, 124 and 125 of 2000, is answered in negative.
62. The Appeal No. 122 of 2000 is allowed in terms of the affirmative answer to question No.4. The Appeals Nos. 123, 124 and 125 of 2000 stand dismissed.
63. A copy of this judgment shall be sent under the seal of the Court to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the cases conformably to the decision in this judgment as required under section 196(5) of the Customs Act.
M.B.A./L-15/KOrder accordingly.