NORTHERN POWER GENERATION COMPANY LTD. VS COLLECTOR OF CUSTOMS, COLLECTORATE OF CUSTOMS, SALES TAX AND CENTRAL EXCISE, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 2231 (2006)

Customs Act (IV of 1969)---

---Ss. 18(2), 19 & Sched.---S.R.O. 279(1)/94, dated 2-4-1994---S.R.O. 1050(I)/95, dated 29-10-1995---Goods chargeable to duty @ 65% ad valorem---Non-payment of duty on such goods for being exempt under S.R.O. 279(I)/94, dated 2-4-1994---Levy of regulatory duty by authority on such goods, excluded from such levy under S.R.O. 1050(I)195---Validity---Importer for non-payment of duty @ 65% on imported goods would not be entitled to exemption from payment of regulatory duty in terms of judgment of Supreme Court reported as 1993 SCMR 412---Importer's appeal was dismissed in circumstances.

Messrs Zaman Paper and Board Mill's case Civil Petitions Nos.1039-L, 1040-L, 1565-L and 1709-L of 1999; Molasses Trading and Export (Pvt.) Ltd.'s case 1993 SCMR 1905; Noon Sugar Mills Ltd. v. CIT PLD 1990 SC 1156 = 1990 PTD 768; PLD 1990 SC 68 and 1993 SCMR 1523 ref.

Collector of Customs v. Ravi Spinning Mills Ltd. and others 1999 SCMR 412 fol.

Mian Ashiq Hussain for Appellant.

Ch. Saghir Ahmed for Respondent.

Date of hearing: 27th March, 2006.

JUDGMENT

MUHAMMAD NAWAZ BHATTI,. J.---As per learned counsel for the appellant, facts in brief are that, "the appellant, a subsidiary Company of WAPDA, imported machinery and equipment, which was exbonded from October, 1995 to December, 1995. The imported goods were subject to customs duty @ 65%. Customs duty, however, was exempted under S.R.O. 279(I)/94, dated 2-4-1994---the machinery and equipment was to be used for setting up the power project of WAPDA"; that, "on 29th October, 1995, the Federal Government issued S.R.O. No.1050(I)/95 levying regulatory duty @ 5% and 10% for the respective categories. The goods chargeable to duty @ 65% ad valorem were, however, excluded from the levy of regulatory duty under Clause (ii)(b) of the said Notification"; that, "the Customs Authorities, levied 5% regulatory duty on the machinery and equipment---purportedly for the reason that after the effect of exemption, the goods were chargeable to concessionary rate of 0%, which was covered under Clause (i) .of the Notification"; that the appellant filed Writ Petition No.4425 of 1997 in this Court challenging the levy of regulatory duty on the basis of the ratio laid down in the case of "Collector of Customs v. Ravi Spinning Mills Limited and others (1999 SCMR 412). This writ petition stood disposed of with the direction to the Customs Authorities to decide the appellant's case with reference to the said judgment. However, the Customs Authorities, "instead of deciding the appellant's case according to the direction of this Court, relied upon an unreported leave refusing order of the Hon'ble Supreme Court of Pakistan in the case of Messrs Zaman Paper Board Mills in Civil Petitions Nos. 1039-L, 1040-L, 1565-L and 1709-L of 1999" and declined the request of the appellant for refunding the amount already charged in the context of regulatory duty with reference to the Notification, dated 29-10-1995; that, "on appeal, the learned Customs, Excise and Sales Tax Appellate Tribunal rejected the appeal vide impugned order, dated 12-8-2004."

2. After having narrated the above facts, learned counsel; for the appellant argued that, "the learned Tribunal illegally treated the concepts of "chargeable and "payable" as interchangeable---while both the concepts are distinct and connote different stages of levy and recovery of taxes. The Hon'ble Supreme Court of Pakistan held, in the case of Molasses Trading and Export (Pvt.) Ltd. cited as 1993 SCMR 1905 (1919) "the concept of exemption as applied to taxation presupposes a liability, and is applicable to the grant of immunity from the liability to be assessed to tax imposed by the statute. This is expounded as the distinction between the liability of taxability and the payability in regard to a tax. The grant of exemption, it was explained, only wipes out the liability for payment of the tax which is presupposed to exist by virtue of the charging section." In another judgment in the case of Noon Sugar Mills Ltd. v. CIT cited as PLD 1990 SC 1156 = 1990 PTD 768, the Hon'ble Supreme Court laid that chargeability (declaration of liability by legislature) assessment and payability (recovery) were three different stages in the imposition of a tax. Exemption is the waiver of charge granting immunity from payability"; that, "the exemption from regulatory duty under S.R.O. No.1050(I)/95 was granted to goods "chargeable" to 65% Customs Duty. The Customs Authorities acted illegally in treating the word "chargeable" in the above said S.R.O. as "payable". The Hon'ble Supreme Court of Pakistan held in the judgment cited as PLD 1990 SC 68, "Interpreting the taxing statute the Court must look to the words of the statute and interpret it in the light of what is clearly expressed. It cannot import provisions in the statute so as to support assumed deficiency. In taxing Act, one has to look merely at what is clearly said. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used"; that, the goods chargeable to tax @ 65% customs duty were specifically ousted from levy of regulatory duty, such goods could not be subjected to tax impliedly. The Hon'ble Supreme Court of Pakistan enunciated the law,---"what is excluded by express words cannot be included on any principle of interpretation", in the judgment cited as 1993 SCMR 1523 (1530)"; that, "the Customs Authorities and the learned Tribunal got misdirected in treating the exempted goods as goods chargeable to zero rate. Exemption and zero rate are distinct concepts with different implications. In sales Tax Act, 1990, zero rate is covered under section 4 while exemption is dealt with under section 13 thereof. In exemption no assessment is to follow. In zero rate assessment is to be made entailing consequences like refund etc. A copy of Finance Act, 1999 is being submitted for example to illustrate that customs law recognizes zero rate separate trom exemption. The impugned order treating exemption as zero rate is misconceived"; that the leave refusal order, relied upon by the respondents in C.P.'s Nos.1039-L 1040-L, 15654L and 1709-L/1999 in the case of Messrs Zaman Paper and Board Mills and others hinged around its own facts and was apparently distinguishable from the facts of the present case". Lastly, it is contended that seen from any angle, the impugned order cannot be validly sustained in the eyes of law and this appeal merits acceptance with heavy costs by directing the Customs Authorities to refund the regulatory duty already paid by the appellant qua the machinery in question.

3. On the other hand, learned counsel for the respondent has vehemently supported the impugned judgment passed by the learned respondent Tribunal on the ground that the same does not suffer either

from any material irregularity illegality or jurisdiction defect. Hence, this appeal merits dismissal with exemplary costs.

4. We have considered the submissions, perused the record and gone through the judgments cited at the bar.

5. To appreciate the submissions made by the learned counsel for the parties, it would be advantageous to reproduce the relevant portion of the above referred Notifications:

"Notification No. S.R.O. 279(I)/94, dated 2nd April, 1994.---In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), subsection (1) of section 13 of the Sales Tax Act, 1990, and subsection (2) of section 5 of the Finance Act, 1985, the Federal Government is pleased to direct that the machinery and equipment, including coal mining equipment as listed in S.R.O. 525(I)/89, dated the 3rd June, 1989, not manufactured locally, shall be exempt from the whole of the Customs duty leviable under the First Schedule to the Customs Act, 1969, regulatory duties leviable under subsection (2) of section 18 of the Customs Act, 1969, Sales Tax and Iqra surcharge chargeable thereon, if imported for setting up or for balancing, modernization, and extension of power generation i.e., oil gas, hydel, coal wind and wave energy projects, including under construction projects subject to the conditions set out below".

Notification No.S.R.O. 1050(I)/95, dated 29th October, 1995.---In exercise of the powers conferred by subsection (2) of section 18 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to levy a further regulatory duty on imports of goods appearing in the First Schedule to the said Act, as detailed below:

(i) The goods chargeable to a statutory or concessionary rate of zero per cent or sixty per cent statutory duty shall be charged a regulatory duty @ 5 per cent ad valorem on import into Pakistan except the following, namely:

(a) Wheat;

(b) Fertilizers;

(c) Power generation plants for which letters of support have been issued by the Government, up to 3,000 MW;

(d) Import of accompanied and unaccompanied baggage;

(e) Goods imported under diplomatic concessions; and

(f) Newsprint imported by publishers of newspapers and periodicals subject to production of a certificate from Ministry of Information and Broadcasting; and

(ii) The goods chargeable to statutory or concessionary rate other than zero per cent on the import into Pakistan shall be charged to a regulatory duty at the rate of ten per cent ad valorem except the following:--

(a) defence imports;

(b) goods chargeable to duty at the rate of sixty five per cent ad valorem; and

"????.."

6. One factor remained admitted that the machinery imported by the appellant was, "chargeable to the duty @ 65% ad valorem" and payment of the same was exempted vide Notification, dated 2-4-1994. As per this very Notification, machinery, a subject matter of the same was exempted from "the whole of the customs duty leviable under the First Schedule to the Customs Act, 1969, regulatory duties leviable under subsection (2) of section 18 of the Customs Act, 1969, Sales Tax and iqra surcharge chargeable thereon..." but in the Notification, dated 29-10-1995, it has been noticed that, "the Federal Government is pleased to levy a further regulatory duty on imports of goods appearing in the First Schedule to the said Act?..". This further regulatory duty is not relatable to the Notification, dated 2-4-1994 and of course same has been exempted qua the, "goods chargeable to duty @ 65% ad veloram". This has not been denied at all that the appellant has not paid even one penny qua the machinery imported by it despite being chargeable @ 65% duty, taking advantage of the Notification, dated 2-4-1994. This very aspect with reference to the said Notification and the main case-law relied upon by the learned counsel or the appellant i.e. "'Collector of Customs v. Ravi Spinning Mills Limited and others (1999 SCMR 412), had been noticed by the Hon'ble Supreme Court in C.Ps. Nos.1039-L, 1040-L, 1565-L, and 1709-L of 1999. Relevant portion thereof is reproduced hereunder:

"Mr. Irfan Qadir, learned counsel in C.P. No. 1039-L/99, however, raised an additional contention in support of his case and contended that the goods imported by his client were subjected to the levy of regulatory duty at the rate of 65 per cent and therefore, in view of the decision in Collector of Customs and others v. Ravi Spinning Ltd. and other (supra), the goods could not be subjected to regulatory duty. Reliance was placed by the learned counsel specifically on the following observations in the above case:

"At this stage, we may mention here that in some cases it was contended by the learned counsel for the respondents/private parties that the goods imported by them were already subject to statutory duty of 65% and therefore, in terms of the notification issued by the Government on 29-10-1995 under section 18(2) of the Act, the regulatory duty could not be enforced against import of such goods. We have already reproduced above, the notification issued under section 18(2) of the Act by the Government on 29-10-1995 imposing regulatory duty which provides that the goods which are already subject to the payment of 65% statutory duty, are exempted from the operation of the notification. We therefore, hold that if on the goods imported by any of respondents the customs duty was already chargeable at the rate of 65% such goods were exempted under the notification, dated 29-10-1995 from payment of regulatory duty. However, we leave it to the Government to examine the individual cases in the light of the above observations".

The contention of the learned counsel does not appear to be correct. What was explained in the above quoted paragraph in the case of Collector of Customs and others v. Ravi Spinning Ltd. and others (supra) was that in respect of the goods which were already subjected to the payment of 65 per cent customs duties, the regulatory duty could not be recovered. It is not disputed by the learned counsel for the petitioners that the goods imported by his clients are not subject to payment of 65 per cent customs duties, although under the Schedule to the Act, the rate of duty in respect of the goods is 65 per cent. Since the ,petitioners have not paid the duty on the goods imported by them at the rate of 65 per cent ad valorem, they are not entitled to exemption from payment of regulatory duty in terms of the judgment of this Court in the case of Collector of Customs and others v. Ravi Spinning Ltd and others (supra). No case of interference with judgment of High Court is made out. The petitions are, accordingly, dismissed and leave is refused".

7. It is true that the above judgment has been passed while refusing to grant the leave but it is also equally true that the particular question raised by the learned counsel for the present appellant has also been noticed and dealt with by the Hon'ble Supreme Court in clear and unambiguous terms, in the said judgment. Following the same with respect, we are of the view that this appeal being devoid of any substantial force merits dismissal. Even otherwise some other points raised by the learned counsel for the appellant are too hyper-technical to extend any benefit to the appellant and the judgments cited at the bar from his and might be helpful for some academic discussion but not in the instant case.

8. For what has been stated above, this appeal stands dismissedlC with no order as to. costs.

S.A.K./N-57/L??????????????????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.