Messrs CHENAB FABRICS AND PROCESSING MILLS LTD., FAISALABAD VS GOVERNMENT OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 5 others
2006 P T D 1412
[Karachi High Court]
Before Muhammad Mujeebullah Siddiqui and Khilji Arif Hussain, JJ
Messrs CHENAB FABRICS AND PROCESSING MILLS LTD., FAISALABAD
Versus
GOVERNMENT OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 5 others.
Constitutional Petition No.D-1665 of 2000, decided on 20/10/2005.
(a) Public functionary-
----Private person cannot be saddled with responsibility of getting an act done by a public functionary.
(b) Taxation---
.----Concessionary S.R.O.---Requirements of such S.R.O. fulfilled by party---Lapse on the part of a tax official in compliance with an administrative order---Effect---Such lapse would not have, effect of negating concession available under law.
(c) Customs Act (IV of 1969)---
----S.21---S.R.O. 1083(I)/90, dated 16-10-1990---S.R.O.929(I)/92, dated 28-9-1992---Constitution of Pakistan (1973), Art.199--- Constitutional petition---Refund of duty drawback, claim for---Fulfilment of all requirements by exporter for availing rebate/duty drawback on export---Non-countersigning of quadruplicate copy of Bill of Export by Assistant Collector (Examination)---Rejection of claim for want of such countersigning--Validity---Such lapse on the part of tax official in compliance with an administrative order would not have the effect of negating concession available under law---Authority had committed a serious error in rejecting such claim on a frivolous ground, which was not sustainable in law---High Court accepted constitutional petition, set aside impugned orders and directed authorities to refund duty drawback to exporter in terms of concessionary S.R.Os.
(d) Administrative instructions---
----Administrative instructions should not be acted in a manner, which would negate the mandate of law---Substantive rights of citizens should not be sacrificed on altar of some procedural and administrative instructions---Principles.
The rights conferred on the citizens under the law should not be denied, on account of any administrative lapse on the part of any public functionary. The administrative instructions for carrying out the purposes of law should not be acted in a manner that the mandate of law itself is negated. The procedures and administrative instructions are always devised and issued for the sake of convenience and uniformity and for promoting the purposes of substantive law and not otherwise. The substantive rights of the citizens should not be crucified on the altar of some procedural, administrative instructions, if otherwise the requirements of a beneficial legislation or notification issued thereunder are fulfilled.
Imtiaz Ali v. Ghulam Ali PLD 1963 SC 382 rel.
(e) Taxation-
----Concession/exemption notification---Concession/exemption would be allowed on fulfilment of conditions specified in such notification and could not be withheld on the ground of any administrative instructions on the part of tax officials subordinate to Central Board of Revenue.
Amir Malik for Petitioners.
Raja Muhammad Iqbal for Respondents.
Date of hearing: 20th October, 2005.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The petitioner has prayed as follows:---
"(i) The petitioners therefore pray that this Honourable Court may be pleased to hold and declare that:
(ii) The consignment in case was covered under S.R.O.'s 1083(I)/90, dated 16-10-1990 and 929(I)/92, dated 28-9-1992 for the purpose of refund of duty drawback as notified in the said S.R.O.'s and the actions taken by the respondents their servants, subordinates are illegal void, unwarranted and without lawful authority.
(iii) That the Honourable Court may be pleased to pass an order directing the respondents to refund the duty drawback arbitrarily withheld by the respondents without lawful reason/basis/ jurisdiction.
(iv) Declare that the impugned order passed annexure "E to E-2" issued by the respondents to the petitioners are illegal mala fide, void.
(v) Direct the respondents to pay the petitioners within the specified period their claim of export rebate, which the respondent arbitrarily withheld without provision of any lawful reason/ basis.
2. The relevant facts stated in the petition are that the petitioner is
a limited company engaged in the business of Textile Production and Exports. The petitioner exported consignment of 100% Cotton Dyed Cloth on 22-5-1993. The shipment was examined by the concerned officer of the customs and was found exactly in accordance with the declaration made in the relevant documents and shipping bill. It is alleged that the declaration was accepted and the Customs officers on examination of goods were fully satisfied, therefore, the petitioner acquired the entitlement/vested right for the refund of duty drawback under S.R.O. 1083(I)/90 dated 16-10-1990 and S.R.O. 929(I)/92 dated 28-9-1992. The petitioner therefore, after completion of shipment formulates and receipt of Bank Credit Advice from the appropriate bank regarding realization of the amount, filed refund application on 14-6-1993 before the respondent No.5, the Deputy Collector (Exports) Customs House, Karachi for refund of duty.
3. The respondent instead of finalizing the duty drawback claimed in accordance with the directives contained in the two S.R.O.'s referred to above issued a show-cause notice dated 8-3-1995, requiring the petition to show cause as to why their claim should not be 'rejected for the reason that the examination report endorsed on reverse of the quadruplicate copy of the Bill of Exports was not got countersigned by the concerned Assistant Collector of Examination. The show-cause notice reads as follows:
"Dated: 8-3-1995
SHOW-CAUSE NOTICE
Messrs Chenab Fabrics and Processing Mills, exported a consignment of 100% Cotton Dyed Cloth valuing Rs.982091 vide Bill of Export No.57618 dated 22-5-1993 and filed a duty drawback claim bearing SR2 No.144563 dated 14-6-1993 under Notification S.R.O. No.1083(I)/90, dated 18-10-1990 and S.R.O. No.938(I)/92, dated 29-9-1992.
2. On scrutiny of the documents it revealed that the examination report endorsed on reverse of the quadruplicate copy of the bill of export had not been got countersigned by the concerned Assistant Collector (Examination) although the bill of export had correctly been marked to him by the concerned Principal Appraiser (Examination). The exporters were accordingly asked to get the examination report duly signed by the concerned Assistant Collector, vide this Collectorate's letter of even number dated 4-10-1993. In response thereof vide their Letter No.RB/Customs/1994 dated 20-4-1994, they informed that due to overlook they could get the needful done before filing of the instant duty drawback claim. They also requested for condonation of this mistake.
3. From the facts referred to above, it is established that the exporters have contravened provisions of section 39(c) of the Customs Act, 1969 punishable under clause (17) of section 156(1) of the Customs Act ibid. Had this gone undetected the Government would have deprived of it's legitimate revenue amounting to Rs.191056in shape of payment of aforesaid duty drawback claim which is otherwise not admissible.
4. Messrs Chenab Fabrics and Processing Mills are, therefore, called upon to show cause as to why their aforesaid claim should not be rejected being unsubstantiated and why penal action against them should not be taken under the aforesaid provisions of law.
5. Documentary response/written reply should reach the undersigned within fifteen days from the date of issuance of this notice. Hearing in this case has also been fixed for 27-3-1995 at 10-00 a.m. when the exporters or their accredited representative may appear before the undersigned to plead the case. If no one appears on the date of hearing or no reply is received within stipulated time, the case will be decided ex parte on merits on the basis of available record."
4. The petitioner replied that under the Law/Appraising Manual proper endorsement of report is liability/responsibility of the appropriate authorities but the respondent instead of following the spirit of mandatory provision of law rejecting the claim vide order dated 19-4-1995 as follows:
"ORDER-IN-ORIGINAL
Messrs Chenab Fabrics and Processing Mills, exported a consignment of 100% Cotton Dyed Cloth valuing Rs.982091 vide Bill of Export No.57618 dated 22-5-1993 and filed a duty drawback claim bearing SR2 No.144563 dated 14-6-1993 under Notification S.R.O. No. 1083(1)/90 dated 18-10-1990 and S.R.O. No.938(1)/92, dated 29-9-1992.
2. On scrutiny of the documents it transpired that the examination report endorsed on reverse of the quadruplicate, copy of the bill of export had not been got countersigned by the concerned Assistant Collector (Examination) although the bill of export had correctly been marked to him by the concerned Principal Appraiser (Examination). The exporters were accordingly asked to get the examination report duly signed by. the concerned Assistant Collector, vide this Collectorate's letter of even number dated 4-10-1993. In response thereof vide their letter No. RB/Customs/ 1994 dated 20-4-1994, they informed that due to overlook they could not get the needful done before filing of the instant duty drawback, claim. They also requested for condonation of this mistake.
3. From the facts referred to above, it is established that the exporters have contravened provisions of section 39(c) of the Customs Act, 1969, punishable under clause (17) of section 156(1) of the Customs Act ibid. Had this gone undetected the Government would have suffered a loss of revenue to the extent of Rs.1,91,056 in the shape of payment of duty drawback claim which was otherwise not admissible.
4. Messrs Chenab Fabrics and Processing Mills were called upon to show cause as to why their claim should not be rejected being unsubstantiated and why penal action should not be taken against them under the aforesaid provisions of law. Hearing in this case was fixed on 27-3-1995.
5. Mr. Muhammad Abdul Majeed, Manager of Messrs Chenab Fabrics and Processing Mills Ltd. appeared and submitted a written reply dated 27-3-1995 to the show-cause notice and reiterated the same arguments as raised in his written reply. Briefly, he stated that due to oversight and rush of work they could not get the examination report endorsed on the reverse of the quadruplicate copy of the Bill of export countersigned by the concerned Assistant Collector. This examination report relates to 1993 and it is not possible for them to get it now countersigned by the then Assistant Collector. He requested that keeping their goods reputation their claim may be processed by condoning mistake which has taken place inadvertently.
6. I have gone through the case record and also considered the written as well as oral submissions of the exporter. The arguments advanced by the exporter is not convincing. It is, therefore, established that the exporter has contravened the provisions of section 39(c) of the Customs Act, 1969, punishable under clause (17) of section 156(1) ibid. The duty drawback claim bearing SR2 No.144563 dated 14-6-1993 is, thus, rejected being inadmissible."
5. The petitioner filed appeal before the respondent No.4, Collector of Customs (Appeals) Karachi, which was dismissed, vide order dated 10-1-1996. The petitioner then filed revision application before the respondent No.3, Member Judicial C.B.R. which was also dismissed, and hence this petition.
6. In the Parawise Comments, the respondents have admitted that the Bill of Export was filed and the goods were examined by the Examination Staff. However, the Examination Report was not countersigned by the Assistant Collector of Customs, as required under Standing Order No.2 of 1990 dated 30-6-1990. They have produced the copy of Standing Order No.2 of 1990, issued by the Collector of Customs (Preventive). It is contained in this Standing Order that shipper shall submit seven copies of the shipping bill giving full particulars of the consignments. The original shall be sent to the Valuation Department through the Computer Bureau, duplicate and triplicate copies of the shipping bill shall be returned to H.C.D. The fourth copy shall make the basis of grant of rebate and the seventh copy will be returned to the exporters for their record. The fifth copy shall accompany the sample to Rebate Section and sixth copy sent to Statistical Division. The exporters will make declaration on all copies of the shipping bills to the effect that they will lodge a refund claim for customs duty and sales tax paid on the imported raw material used in the production of the goods and for excise duty on locally manufactured excisable goods exported out of the country and present for registration. After registration of the shipping bill in the exported, it shall be presented to Appraising Staff who will examine the goods in respect of quantity and quality and other details as required for duty drawback purposes and endorse the same on fourth copy of the shipping bill as well. The Appraising Staff shall carry out the examination of rebateable goods with great care and discrepancy found in the examination report will be dealt with seriously. It is further provided in this Standing Order that after the registration at the Machine Number Counter, since further processing takes more time, the shipping bill is often required by the Clearing Agents for the purpose of `Passed in Full' or payment of duty/cess etc. which should be given back to the agents for their purposes. It is also provided that processing of shipping bill shall be completed on the same day they are filed in the section. The processing section shall maintain a register wherein particulars of shipping bills not processed/completed on the same day shall be recorded showing reasons for non-completion. The Assistant Collector, Export, shall inspect this register next morning and shall personally try to resolve the issue and incomplete shipping bills be completed without loss of time. The Standing Order also contains that the examination report particularly those under claim of rebate recorded on the reverse of triplicate and quadruplicate copies of shipping ' bills should be self-contained and comprehensive giving every vital information, that should enable the staff in Rebate Section to finalise duty drawback claims. It is further provided in the Standing Order that the shippers or their agents shall present the duplicate and triplicate copies of the shipping, bill along with quadruplicate copy to the Inspector Preventive Services on duty. He will retain the duplicate and triplicate .copies in the Division and hand over the quadruplicate copy of their agents, after endorsing the, "allow loading" order on reverse of all the copies. Thereafter it was the duty of the shipper or Clearing Agent to produce before the Divisional Officer quadruplicate copy of the shipping bill for endorsement. The Divisional Officer shall affix the stamp showing his designation and he should write his name in block letters under his signatures. He will also indicate the actual quantity of the goods shipped on the quadruplicate copy of shipping bill and thereafter quadruplicate copy will be returned to the shippers/agents.
7. It is further stated in the Parawise Comments that the Exports, Clearing and Forwarding Agent got the goods examined by the Examiner, Appraiser and Principal Appraiser. Finally Principal Appraiser marked the bill of export to the Assistant Collector of Customs but agent did not get it examined by the Assistant Collector which is a mandatory requirement. It is alleged that non-compliance with the mandatory requirements tantamounts to disqualification for the duty drawback claim. The filing of claim for duty drawback and rejection thereof by the respondent No.5 is admitted. It is further contended that after filing of duty drawback claim documents were scrutinized and it was found that the goods were not examined by the Assistant Collector of Customs, which was mandatory requirement under clause (25) of the Standing Order No.2/1990, which provides that the shipment of goods involved less than 14% rebate may be allowed by the Principal Appraiser and for goods involved more than 14% rebate, shipment may be allowed by the Assistant Collector. According to respondents since the Assistant Collector did not examine the goods and endorsement was not made by him on the quardruplicate copy, therefore, duty drawback claim was inadmissible. It is averred that it is sole responsibility of the Exporter or his Clearing and Forwarding Agent to get their goods examined and have the report endorsed on the reverse of the bill of export. Since exporter failed to fulfil a mandatory requirement, duty drawback claim was not admissible and the claim was consequently rejected.
8. We have heard the learned Advocates for the parties.
9. Mr. Amir Malik, learned counsel for the petitioner has submitted that the claim for refund of duty drawback has been declined on the sole ground that the petitioner failed to get quadruplicate copy of the bill of export countersigned by the Assistant Collector (Examination). He has submitted that the duty drawback claim was preferred in pursuance of Notification S.R.O. No.1083(I)/90 and S.R.O. No.929(I)/92 dated 16-10-1990 and 28-9-1992 respectively. Admittedly, all the conditions for claiming duty drawback were duly complied with and still the petitioner has been penalized for lapse of a procedural requirement on the part of Assistant Collector of Customs (Examination) which was prescribed in Standing Order No.2 of 1990, issued by Collector of Customs (Preventive). He has further submitted that the administrative instructions which are procedural in nature issued by the Collector of Customs cannot have the overriding effect, over the S.R.O. issued by the C.B.R. in exercise of powers conferred on it under section 21 of the Customs Act, 1969. According to learned counsel an administrative order issued by Collector of Customs, who is a subordinate official of C.B.R. by no stretch of imagination can take away a vested right in favour of petitioner created under the S.R.O. issued by the C.B.R., which is apex body in the Tax 'hierarchy. He has further submitted that once the shipping bill is presented by an exporter, thereafter, it becomes a document which is to be handled by the Customs officials and the exporter or his agent not being the officials of the Customs Department cannot be saddled with any responsibility for any official act to be performed qua the said document. He has further pointed out that in addition to the fact that the processing of shipping bills is entirely within the domain of the Customs official and on account of any lapse on their part, an exporter cannot be deprived of any right accruing under law, even in the administrative instructions contained in Standing Order No.2/1990, the petitioner was not required to get the fourth copy endorsed by the Assistant Collector. He has taken us through the Standing Order to show that in para. 1, it is provided that the shipper shall submit seven copies of the shipping bill giving full particulars of the consignments. The original shall be sent to the Valuation Department through the Computer Bureau, duplicate and triplicate copies of the shipping bill shall be returned to H.C.D., the fourth copy shall make the basis for grant of rebate and the seventh copy will be returned to the exporters for their record. The fifth copy shall accompany the sample to Rebate Section and sixth copy be sent to Statistical Division. The exporter will make declaration on all copies of the shipping bills to the effect that they will lodge a refund claim for customs duty and sales tax paid on .the imported raw material used in the production of the goods and for excise duty on locally manufactured excisable goods, exported out of the country. It is provided in para. 2, that after registration of the shipping bill in export department, it shall be presented to the Appraising Staff, who will examine the goods in respect of quantity and quality and other details as required for duty drawback purposes and endorse the same on fourth copy of. the shipping bill as well. He has pointed out that under this instruction, the endorsement on the fourth copy is to be made by the Appraising Staff. Under para. 5, the processing of shipping bills shall be completed on the same day they were filed in the section. The Assistant Collector (Export) was required to inspect the register maintained in this behalf next morning and was further required to personally try to. resolve the issue in case of any objection. Under para. 14, the Examination Reports particularly those under claim of rebate recorded on the reverse of triplicate and quad copies of shipping bills were required to be self-contained and, comprehensive giving every vital information that should enable the staff in Rebate Section to finalise duty drawback claims. It is also indicative of the fact that the endorsement and everything else on quadruplicate copy was the duty of the Customs officials and not the exporter. Under paragraphs 16 and 25, the shipment of goods involving less than 14% rebate was to be allowed by the Principal Appraiser and the goods involving more 14% rebate was to be allowed by the Assistant Collector. Again it is indicative of the fact that all necessary acts for the purpose of rebate were to be performed by the Customs officials. Under para. 29, the shippers and their agents were required to present the duplicate and triplicate copies of the shipping bill along with the quadruplicate to the Inspector Preventive Services on duty. The duplicate and triplicate copies were to be retained in the Division and the quadruplicate copy was to be given to the agent of exporter after endorsing the "allow lodging" order on reverse of all the copies. According to para. 31, it was the duty of shipper or clearing agent to produce the quadruplicate copy before the Division for endorsement Mate's Receipt Number and date over his stamped designation. After doing the needful, it was to be returned to the shipper/ agent. He has pointed out that in the Standing Order No.2 of 1990, it is nowhere provided that the shipper/agent was required to get the endorsement made on the reverse of the quadruplicate. He has submitted that since the genuineness of the claim has not been doubted at all, therefore, the refusal of rebate/duty drawback for the reason that the shipper failed to get the reverse of quadruplicate copy, countersigned by the Assistant Collector would amount to negation of the concession available in law and perpetration of injustice on the basis of some so-called practice which is not the requirement of any law.
10. Mr. Raja M. Iqbal, learned counsel for the respondent has supported the impugned orders but he is not able to rebut the contentions raised by the learned counsel for the petitioner. He is not able to show any law under which a private person can be saddled with the responsibility of getting an act done by a public functionary. The sole contention is that on account of paucity of staff employed in the .Customs Department the shippers/their agents are asked to take the documents from one official to another and get the process completed.
11. We find no substance in the contention. The reason being that if the work load is more and the staff employed by the Customs Department is less, it, is the responsibility of C.B.R. to employ sufficient number of staff to cope up with the work load.
12. We are persuaded to agree with the contentions of the learned counsel for the petitioner that once all the requirements for availing the concession under a S.R.O. are fulfilled, thereafter, a lapse on the part of a tax official in compliance with an administrative order shall not have the effect of negating the concession available under the law.
13. For the foregoing reasons, it is held that the respondents Nos. 5, 4 and 3 have committed a serious error in rejecting the claim of the petitioner on a frivolous ground which is not sustainable in law. The rights conferred on the citizens under the law should not be denied on account of any administrative lapse on the part of any public functionary. The administrative instructions for carrying out the purposes of law should not be acted in a manner that the mandate of law itself is negated. The procedures and administrative instructions are always devised and issued for the sake of convenience and uniformity and for promoting the purposes of substantive law and not otherwise. The substantive rights of the citizens should not be crucified on the altar of some procedural, administrative instructions, if otherwise the requirements of a beneficial legislation or notifications issued thereunder are fulfilled.
14. We would like to refer the principle of law laid down by the Hon'ble Supreme Court in the case of Imtiaz Ali v. Ghulam Ali PLD 1963 SC 382, which has acquired the status of classic principle of law in the administration of justice, which reads as follows:---
" the proper place of procedure in any system of
administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. Any system which by giving effect to the form and not the substance defeats substantive rights is defective to that extent."
15. We would further like to observe that normally the concession/ exemption notifications issued under the various tax statutes are complete code in themselves until and unless provided to be otherwise and the concession/exemption is to be allowed on fulfilment of the conditions specified therein and cannot be withheld on the ground of any administrative instructions on the part of tax officials subordinate to C.B.R.
16. For the foregoing reasons it is held that the petitioner has fulfilled all the requirements for availing the rebate/duty drawback on export which has been wrongly with held by the respondents. All the impugned orders passed by the respondents are hereby set aside being illegal and unwarranted. The respondents are directed to refund the duty drawback to the petitioner in terms of S.R.Os. No.1083/(I)/90, dated 16-10-1990 and 929(I)/92, dated 28-9-1992. The petition is allowed as prayed.
17. After hearing the learned Advocates for the parties on 20-10-2005, the petition was allowed by short order. These are the detailed reasons in support thereof.
S.A.K./C-9/KPetition accepted.