Messrs PRIME INTERNATIONAL TRADERS through Sole Proprietor VS CUSTOMS, EXCISE AND SALES TAX APPELLATE TRIBUNAL, LAHORE, 2006 PTD-LAHORE-HIGH-COURT-LAHORE 2494 (2006)

Customs Act (IV of 1969)---

---Ss. 32, 156(1) & 196---Import of goods under the Scheme, "no duty no draw back rules"---Exemption---Claim for---Importer, who imported four consignments of stainless steel sheets and coils, filed bills of entry and all four consignments were released by Customs Authorities without payment of customs duty and other taxes leviable thereon in terms of notification under the Scheme "no duty no draw back rules"---"No duty no draw back scheme" was regularized by stringent conditions provided in said notification which required the export house or exporter to obtain serially numbered pass book from Collector of Customs---Said conditions suggested that Importer company had to approach the Collector of Customs before making any order for the import of input raw material or before purchasing locally produced input goods---During scrutiny of importer's, records by the Customs Authorities it was found that bills of entry were filed prior to issuance of said pass book which he was required to obtain before import of consignments i.e. input goods---Importer did not enter the pass book number on the bill of entry, but he entered the pass book number after it was issued by Assistant Collector---Importer held Department responsible for delayed issuance of said pass book---Contention of importer was that they having complied with substantial requirement of notification, could not be denied exemption available under said notification---Even otherwise omission of pass book number on the bills of entry amounted to violation of rules attracting a maximum penalty of Rs.25,000 in terms of S.156(1) of Customs Act, 1969---Appellant could not be denied exemption for which he was otherwise entitled solely for the reason that bill of entry did not contain pass book number---Appeal was accepted and impugned orders were cancelled---Appellant was held entitled to exemption, subject to imposition of penalty of Rs. 25,000 for violation of relevant rules.

Syed Mansoor Ali Shah for Appellant.

Farooq Azam for Respondents.

ORDER

Facts of the case, as stated, are that the appellant Messrs Prime International Traders, Lahore imported four consignments of Stainless Steel Sheets and coils; and filed Bills of Entry bearing Machine No.2394, dated 14-1-2000, No.2452, dated 18-1-2000, No. 2494, dated 21-1-2000 and No.2503, dated 14-1-2000 valued at Rs.70,74,219 (total of four bills of entry) involving duty and taxes amounting to Rs.36,03,432. All the four consignments were released by the customs authorities without payment of customs duty and other taxes leviable thereon, in terms of S.R.O. 844(I)/98, dated 23-7-1998 under the scheme "no duty no draw back rules." This S.R.O. had been issued in supersession of C.B.R.'s earlier notification vide S.R.O. 1060(I)/97, dated the 28th October, 1997. No Duty No Draw Back Rules, 1998 were applicable in respect of goods imported under the Import Policy Order for the time being enforced, including banned or restrained items under said order, except polyester staple fiber to following categories of persons and goods:

(i) direct and indirect exporters without payment of custom duty, sales tax and income tax and

(ii) locally produced input goods or supplies without payment of excise duty, sales tax and income tax.

'No Duty No Draw Back Scheme', was regularized by stringent conditions, provided in para. 1 to 15 of the said S.R.O. Para. 3 of the S.R.O., inter alia require the export house or exporter to obtain serially numbered pass book from the Collector of Customs in the form, set out in Appendix-I of these rules. The export house or exporter is further required to indicate the name of Custom House of the Collectorate for the clearance of imported input goods. It is provided that the bill of entry shall contain number of the pass book and name of the Collectorate of Customs under whose jurisdiction the input goods have been imported. Additionally, a detailed and comprehensive procedure for procurement of input goods has also been provided vide para. 3(1) and (2) of the said S.R.O., in view whereof the Collector of Customs is required to determine the input to output ratio himself, showing the extent of wastage of each input goods, provided input to output ratio along with wastage, if the same has not already been notified by the C.B.R. for these particular finished goods and that the Collector shall enter such ratio determined by him in the pass book. He shall also determine the annual requirement of the input goods based on the past export performance of the export house provided that in case of new exporter, the Collector of Customs may determine the extent of annual requirement of the input goods on the basis of input to output co-efficient ratio or determine the requirement through survey or analysis and without asking past export performance. These conditions suggest that the appellant company had to approach the Collector of Customs before making any order for the import of the input raw material or before purchasing locally produced input goods. During scrutiny of the appellant's records by the customs authorities, it was noticed that aforementioned bills of entry were filed by the appellant prior to issuance of the pass book which he was required to obtain before import of the consignments i.e. input goods. On the basis of this discrepancy, a show-cause notice C. No. V-Cus/23/2000/170, dated 29-3-2002 was served upon the appellant by the then Collector of Customs, Custom House, Lahore; (Mr. Aftab Anwar Baloch), consequently, the Order-in-Original No.66 of 2000, dated 31-5-2000 was passed by the said Collector upholding the charges levelled in the show-cause notice. Thereafter, an appeal was preferred before the Customs, Excise and Sales Tax Appellate Tribunal, Lahore, (Customs Appeal No. 340/LB of 2000). Learned Tribunal dismissed the appeal and the order of Collector was upheld, hence this appeal before us.

2. Learned counsel has contended that goods imported by the appellant are used for the manufacture of goods for export. Appellant complied with all the requisites of S.R.O. and passbook was not issued for the reason that number of passbook was not entered in the bill of entry. Application for the issuance of passbook was filed on 24-1-1999, two months prior to the arrival of goods. The issuance of passbook was delayed unreasonably. The appellant had export orders and goods could only be exported by appellant if his import consignment is released. The Collector is bound to issue.

3. We have heard the learned counsel for the appellant as well as learned counsel for the respondents and have also gone through the impugned order and documents available on the record. It is contended by the learned counsel for the appellant that the appellant company had imported impugned goods pending their case for issuance of the pass book and that his client has not misdeclared anything as misconstrued by the respondents; as such the case of the appellant does not fall under the purview of section 32. He further contends that the S.R.O. gives exemption to the goods imported for the use of goods solely meant for export which have been exported converting them into finished goods. The appellant did not enter the passbook number on the bill of entry but he entered the passbook number after it was issued by the Assistant Collector. The appellant is holding department responsible for delayed issuance of the passbook. The learned counsel further contends that the appellant complied with the substantial requirement of the S.R.O., hence they cannot be denied of the exemption available under the said S.R.O. particularly when these have been exported. The omission of passbook number on the bills of entry amounts to violation of rules attracting a maximum penalty of Rs.25,000 in terms of section 156(1) of the Customs Act, 1969. Appellant cannot be denied exemption, for which the appellant is otherwise entitled, solely for the reason that bill of entry does not contain passbook number. The delay in issuance of passbook is attributed to the respondent No.3. Since the passbook was subsequently issued by Assistant Collector and its number was added in the bill of entry and the appellant was allowed to get his goods released on the basis of exemption. The appellants at this stage cannot be deprived of the exemptions under S.R.O., due to non-compliance of rules for which the law has provided the penalty of imposition of fine to the tune of Rs.25,000.

The objections of Department that the passbook was issued by the Assistant Collector instead of the Collector; entries made therein are also not in sequential order; the clearance of the consignment had to be allowed by the Collector himself after satisfying himself about the fulfilment of conditions; while in the instant case release of goods was allowed by the staff even lower than the Assistant Collector at belated stage cannot be entertained, specially in the circumstances when the department has not taken any action against its delinquent staff.

For the foregoing, the appeal is accepted and the impugned orders are cancelled. Appellant is held entitled to exemption under S.R.O. 1060(I)/97, dated 28-10-1997 subject to the imposition of penalty of Rs.25,000 for violation of relevant rules.

H.B.T./P-22/LAppeal accepted.