Messrs QAISER BROTHERS (PVT.) LTD., KARACHI VS CONTROLLER OF CUSTOMS VALUATION CUSTOM HOUSE, KARACHI
2005 P T D 2543
[Karachi High Court]
Before Sabihuddin Ahmed and Khilji Arif Hussain, JJ
Messrs QAISER BROTHERS (PVT.) LTD., KARACHI
Versus
CONTROLLER OF CUSTOMS VALUATION CUSTOM HOUSE, KARACHI and 3 others
Constitutional Petitions Nos. 440 of 1991 and D-2813 of 1992, decided on /01/.
th
December, 2005. (a) Notification---
----Where the statute itself provides the date from which a notification is to become effective no general principle can be resorted to---Equities of the situation must always be looked into before giving retrospective effect to a notification.
(b) Customs Act (IV of 1969)---------
------S. 25-B [as it stood in 1991-1992]---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Goods of the petitioner were allowed to be cleared upon payment of duty at the rate of US $800 as per declaration of the petitioner and furnishing bank guarantee for the disputed amount---Provision of S.25-13, Customs Act, 1969 enabled the Central Board of Revenue or its delegatee to fix the ITP of goods at such rates as it might deem fit but there was no room for unfettered discretion in public law and all public powers must be exercised rationally and upon objective considerations---No material, in the present case, was placed on record to indicate as to what persuaded the Controller of Customs Valuation to fix the ITP of the imported goods at US $1165 per metric ton, it had also not been explained whether the ITP had rightly been fixed on 29-10-1991 and as to what persuaded the competent Authority to slash it by more than 30% within six months---Record showed that equally responsible officer of the Customs viz. the Collector of Customs as well as the Valuation Inspectors under Statutory Rules . (COTECNA), who were required to be aware of the trend of international prices had opined well before clearance of the consignments that the value declared (US $800) by the importer was not incorrect---Department had allowed to clear the consignment upon furnishing bank guarantee subject to resolution of the question of the correct ITP and as such it was a live issue rather than a past and closed transaction on 1-4-1992---High Court, in circumstances, round no justification in refusing to give retrospective effect to the notification dated 1-4-1992 insofar as same concerned the petitioner---Constitutional petition was allowed to the extent of holding the petitioner's liability to pay customs duty at the rate of US $830 per metric ton who will deposit the outstanding amount whereupon the bank guarantee shall be discharged.
Army Welfare Sugar Mills v. Federation of Pakistan 1992 SCMR 1652; Illahi Cotton Mills v. Federation of Pakistan PLY) 1997 SC 582; Anoud Power Generation v. Federation of Pakistan PLD 2001 SC 340 and Polyron v. Government of Pakistan PLD 1999 Kar. 238 ref.
Abdul Ghaffar and Khalid Jawed Khan for Petitioners (in C.P.D. No.2813 of 1992).
Faisal Arab Standing Counsel for Respondents.
Jawed Farooqui for Respondent No. 1.
Date of hearing: 1st December, 2004.
JUDGMENT
SABIHUDDIN AHMED, J.---The petitioners imported 500 metric tons of chemical known as Dioctyl Ortho Phthalates (DOP) from Germany at an invoice CNT price of US$ 800 per metric ton. Upon arrival of the goods they were stole in the bonded warehouse and ex bond bills of entry for their clearance were filed by the petitioner between December, 1991 to February, 1992. At that time the CNF value of DOP for the purposes of custom duty was fixed by respondent No.1 at US$ 1165 per metric ton in terms of Notification dated 29-10-1991. The petitioner protested against such high valuation of price and attempted to show that US$ 800 per metric ton was the realistic and correct price. Anyhow the petitioner was allowed to clear the goods upon payment of duty at the rate of US$ 800 and furnish bank guarantees for the disputed amount.
2. It may be added that apart from other material in support of the petitioner's contention that the transaction value of the goods at the relevant time was around US$ 800 per metric ton, the petitioner has relied upon a letter dated 1-9-1991 from the respondent No.2 addressed to the respondent No. 1. In the aforesaid letter it has been stated that the former had advised through an earlier letter dated 25-7-1991 to fix the ITP (Import Trade Price) of DOP at US $ 800 per metric ton but it was surprisingly disregarded and the same was fixed at US $ 1165 per metric ton. It is further stated that the ITP ought to be determined fairly and judiciously rather than arbitrarily or whimsically and therefore, the one in respect of DOP calls for immediate review. In any event admittedly the Notification dated 29-10-1991 was amended w.e.f. 1-4-1992 and the I.T.P. was fixed at US$ 830 per metric ton.
2. Nevertheless, when the petitioner applied for discharge of the Bank guarantee undertaking to pay the difference between US $ 800 and 830 per metric ton, they were informed that the Notification reducing the I.T.P. to US$ 830 per metric ton became operative after 1-4-1992 and the petitioner could not avail its benefit since his consignment was cleared between December, 1991 and February, 1992.
3. Though a number of grounds were raised in the petition Mr. Khalid Jawaid Khan learned counsel for the petitioner mainly urged that reconsideration of the ITP took place at the behest of the petitioner and as a matter of law a notification conferring benefits as distinguished from those taking away rights could always be given retrospective effect. In this context he relied upon the pronouncements of the Honourable Supreme Court in Army Welfare Sugar Mills v. Federation of Pakistan 1992 SCMR 1652, Illahi Cotton Mills v. Federation of Pakistan PLD 1997 SC 582, Anoud Power Generation v. Federation of Pakistan PLD 2001 SC 340 as well as a Division Bench judgment of this Court in Polyron v. Government of Pakistan PLD 1999 Kar. 238, which was incidentally authored by one of us (Sabihuddin Ahmed, J.). Indeed all the aforesaid judgments support the legal principle relied upon by learned counsel. In Army Welfare Sugar Mills under Notification dated 29-8-1985 new sugar mills commencing operation during 1982-83 crushing season were exempted from 50% of the excise duty leviable on their production during the first two years and those who had paid duty were declared entitled to refund/adjust in a specified manner. The notification obviously conferred benefits with effect from the date prior to its issuance but was held valid on the ground that it did not impair an existing right or impose a new liability but was only a beneficial provision. In Polyron's case a scheme for rural industrialization was circulated intending to provide incentives for industrialization in rural areas by granting incentives in the form of exemption from custom duty etc. In the actual notification machinery imported for installation in the Hub Industrial Trading Estate was subjected to 10% of the normal duty while those in other rural areas were totally exempted. The petitioner was thus required to pay 10% of the normal custom duty upon arrival of the machinery imported by him and he protested against the same. Several months later i.e. 1-11-1993 the machinery to be installed in Hub Industrial Estate was also granted total exemption. He was held entitled to the benefit of the Notification, dated 1-11-1993 on the ground that same was premised on the declared policy of the Government and in accordance with the ratio of the judgment in Army Welfare Sugar Mills and Illahi Cotton Mills cases.
4. Mr. Faisal Arab learned Standing Counsel contended that the principles laid down in the above cases was only one of interpretation of the effect of a notification and could not prevail over specific statutory provision. He pointed out that section 25-B(3) expressly provided when a notification under subsection (1) would become effective and therefore, the above precedents could be of little assistance to the petitioner. In principle learned standing counsel appears to be correct to the extent that when statute itself provides the date from which a notification is to become effective no general principle can be resorted to. Nevertheless, it needs to be kept in view that subsection (3) was inserted in section 25-B only through the Finance Act, 1993 and prior to its insertion the, principle laid down in the reported precedents would always be resorted to. Since the consignment in question was imported in 1991-1992 the contention of the learned standing counsel must be repelled.
5. Moreover it was contended that the case relied upon by Mr. Khalid Jawaid Khan do not require that whenever a notification purports to confer benefits it must invariably be given retrospective effect but merely suggests that it is possible to do so if the circumstances so demands. To this extent we are entirely in agreement with the learned standing counsel and would hold that equities of the situation must always be looked into before giving a notification retrospective effect. Indeed section 25-B of the Customs Act (as it then stood) enabled the Respondent No.3 or its delegate to fix the ITP of goods at such rates as it may deem fit. Nevertheless, it is well-settled that there is no room for unfettered discretion in public law and all public powers must be exercised rationally and upon objective considerations. Though it is stated in the parawise comments that ITP is fixed keeping in view the price trend in international market. No material whatsoever was placed on record to indicate what persuaded the Respondent No.1 to fix the ITP of DOP at US $ 1165 per metric ton. It has also not been explained that if it had been rightly fixed on 29-10-1991, what persuaded the competent authority to slash it by more than 30% within six months.
6. On the other hand it is on record that an equally responsible officer of the Custom i.e. the Respondent No.2 as well as the Valuation Inspectors under statutory Rules (COTECNA), who were required to be aware of the trend of international prices had opined well before clearance of the consignments that the value declared by the petitioner was not incorrect. In any event the petition had been allowed to clear the consignment upon furnishing bank guarantee subject to resolution of the question of the correct ITP and as such it was alive dispute rather than a past and closed transaction on 1-4-1992. In the circumstances, we find no justification in refusing to give retrospective effect to the Notification, dated 1-4-1992 insofar as it concerns the petitioner.
7. For the foregoing reasons, we would allow the petitions to the extent of holding the petitioner's liability to pay custom duty at the rate of US $ 830 per metric ton. He will deposit the outstanding amount whereupon the Bank guarantee shall be discharged.
M.B.A./Q-51/KOrder accordingly.