ASSISTANT COLLECTOR OF CUSTOMS AFU, AIRPORT, LAHORE VS Messrs TRIPPLE-M (PVT.) LTD., 2006 PTD-SUPREME-COURT 769 (2006)

(On appeal from the judgment dated 10-1-2002 of the Lahore High Court, Lahore passed in W.P. No. 6490 of 1994).

(a) Customs Act (IV of 1969)---

----S. 32(3)---Constitution of Pakistan (1973), Art.185(3)---Notice of demand---Limitation---Leave to appeal was granted by Supreme Court to give authoritative determination with regard to questions of limitation and unreasonable delay.

(b) Customs Act (IV of 1969)---

----S. 32(3)---Notification S.R.O. 561(I)/88, dated 30-6-1988---Regulatory duty, payment of---Notice of demand under S.32(3) of Customs Act, 1969---Limitation---About two months after clearance of goods, on 10-7-1989 authorities issued notice of demand for recovery of regulatory duty---After receiving reply of importer, authorities remained silent for about three years, when on 31-8-1992 a notice of hearing was issued to the importer---During the hearing, authorities decided the matter against importer but High Court, in exercise of Constitutional jurisdiction, set aside the order passed by the authorities on the ground that the order-in-original had been passed after an unreasonable delay---Plea raised by the authorities was that the statutory notice had been issued within the prescribed period of time, while second notice was only a notice for hearing of the case---Validity---Statutory notice was issued within less than two months of the clearing of the consignment and thus was within time---Subsequent notice dated 31-8-1992, was a notice of date of hearing requiring the importer to appear before the authorities for showing cause as to why short recovery as regulatory duty be not recovered---Issuance of notice of date of hearing was not a fresh show-cause notice---Second notice had to be treated as a notice in continuation of the proceedings before the authorities which had commenced within time, under the earlier show cause notice and was merely a notice of date of hearing of the case---Proceedings initiated through show cause notice dated 10-7-1989, were well within time and were not hit by the period of limitation prescribed under S.32(3) of Customs Act, 1969, and were never dropped---Order of High Court that the order-in-original passed by authorities was not within a reasonable time from the date of issuance of notice dated 10-7-1989, the same were neither here nor there---No order could be scrapped or annulled or set aside, only on the ground that the same had been passed with unreasonable delay---No such concept was attached to judicial and quasi judicial proceedings, unless provided in the statute---Such observation of High Court had no value in the eye of law and judgment passed by High Court was set aside---Appeal was allowed.

A. Karim Malik Senior Advocate Supreme Court and M.A. Qureshi, Advocate-on-Record (absent) for Appellant.

Mushtaq Ahmad Chaudhry, Advocate Supreme Court for Respondent No.1.

Date of hearing: 20th December, 2005.

JUDGMENT

M. JAVED BUTTAR, J.---This appeal, by leave, is directed against the judgment dated 10-1-2002 passed by a learned Single Judge of Lahore High Court, whereby Writ Petition No.6490 of 1994, instituted by respondent-Company was allowed and all the three concurrent orders passed by the Customs hierarchy (mentioned below) i.e. the order-in-original passed by the appellant, the appellate order passed by the Collector (Appeals) and the revisional order passed by the Government of Pakistan were set aside.

2. The relevant facts are, that the respondent-Company imported a consignment of metalised and coated plastic films and polyester weighing 590 k.gs. The Bill of Entry was filed on 30-4-1989 and the goods were released to the respondent on 2-5-1989 on payment of the demanded custom duty at the rate of Rs.110 per k.g. in terms of the Notification No.S.R.O.505(I)/88, dated 26-6-1988. Within about two months of the clearance of the said goods on payment of the said duty i.e. on 10-7-1989, the appellant Assistant Collector issued a show cause notice to the respondent demanding a further sum of Rs.96,964 on the ground that the importer was liable to pay regulatory duty at a rate of 100% under Notification No. S.R.O. No. 561(I)/88, dated 30th June, 1988 on the said imported goods which was not paid and the respondent-Company was called upon to pay the said amount.

3. The respondent-Company answered this notice through reply dated 8-8-1989 denying its liability to pay the said regulatory duty. The Department thereafter remained silent for about three years and issued a hearing notice dated 31-8-1992 requiring the appearance of the respondent-Company in the said connection which was followed by an order-in-original passed on 26-9-1992 which directed the respondent-Company to pay up the above mentioned amount of regulatory duty. The appeal filed by the respondent-Company was dismissed on 28-9-1993 and its revision was dismissed by Government of Pakistan on 29-3-1994. The importer then approached the Lahore High Court through Writ Petition No.6490/1994 impugning the imposition of the above mentioned regulatory duty, which petition was allowed through a judgment of the Lahore High Court announced on 10-1-2002 essentially on the ground that the impugned order-in-original had been passed after an un reasonable delay and that the Department could not be given latitude to keep an importer hanging in balance indefinitely and for an unending period of time and further that the notice which was required to be issued within six months in terms of section 32(3) of the Customs Act, 1969 (hereinafter referred to as the Act), had not been issued within the prescribed time.

4. Leave to appeal was granted by this Court on 19-11-2004 to consider the following:-

"5. Having examined all aspects of the matter we are of the view that it is a fit case where the above noticed questions of limitation and unreasonable delay, required authoritative determination because according to the learned Senior Advocate Supreme Court for the petitioner, these issues were involved in a large number of cases. Consequently, this petition is allowed and leave is granted to consider the said questions."

5. We have heard the learned counsel for the parties and have also seen the relevant record.

6. It is submitted by Mr. A. Karim Malik, learned Senior Advocate Supreme Court for the appellant that the statutory notice having once been issued within the prescribed period of time, could not be scraped only because a further notice, which was for hearing of the case and at the worst it could be treated only as a reminder, had been issued at the subsequent stage on 31-8-1992 and the then prescribed period of limitation of six months under section 32(3) of the Act, would be computed from 10-7-1989 when the show-cause notice was issued to the respondent, which was well within time and not from the date of any subsequent notice(s). It has further been submitted that in quasi-judicial and judicial proceedings, there is no concept of proceedings being annulled on account of some alleged unreasonable delay which may have crept into the matter for any reasons and in any case, in the present case there was a justifiable reasons for delay because the imposition of regulatory duty was under serious challenge before the various fora including this Court.

7. The learned counsel for the respondent-Company has opposed this appeal and has defended the impugned judgment of Lahore High Court. It has been submitted that the period of limitation is to be computed from 31-8-1992 when the subsequent notice was issued by the appellant requiring the respondent-Company to pay above said amount of the regulatory duty because prior to that the proceedings in hand commenced under the above said first show-cause notice dated 10-7-1989 were dropped. The learned counsel, in this regard, has referred to appellant's letter dated 6-11-1990 addressed to the Audit Officer, Lahore, the operative part of which reads as under:--

"Since the said goods fall in Heading 3920 of the said S.R.O. which shows duty Rs.110 per k.g. in Col. III of the said S.R.O. Therefore the duty was correctly charged and no short recovery is involved in this case. It- is requested that audit objection may please be dropped.

(Sd.) Assistant Collector, A.F.U.

Airport, Lahore."

It is thus argued that since proceedings stood dropped previously, the period of limitation in the present case, would be computed from the date when fresh proceedings were initiated in the present case, the relevant, date would be 31-8-1992 when a notice was issued by the appellant to the respondent-Company asking the respondent to pay the above said amount of the regulatory duty and if calculated from the said date, the .proceedings were clearly barred by time, having been initiated beyond the then statutory period of six months provided in section 32(3) of the Act. The learned counsel however, has not been able to justify the observation of the learned Single Judge of the High Court that since the order-in-original passed by the appellant was not within reasonable time from the date of issuance of first show-cause notice on 10-7-1989, the same was bad in the eye of law.

8. It is on record that a notice was issued to the respondent-Company on 10-7-1989 i.e. within less than two months of the clearing of the consignments and thus within time. The subsequent notice dated 31-8-1992 was a notice of date of hearing requiring the respondent to appear before the appellant on 12-9-1992 for showing cause that why short recovery of Rs.96,964 as regulatory duty, be not recovered. By no stretch of imagination, it can be said to be a fresh show-cause notice. It has to be treated, as a notice in continuation of the proceedings before the appellant which had commenced, within time, under the show-cause notice dated 10-7-1989. Even otherwise, it was merely a notice of date of hearing of the case. We have given our anxious consideration to the letter dated 6-11-1990 addressed by the appellant to the Audit Officer, which according to the learned counsel for the respondent, means that the proceedings had been dropped against respondent in 1990. We are unable to agree with this contention as well. The said letter does not show that the proceedings had been dropped. The last paragraph of the said letter (reproduced above), cannot be treated as a decision of the appellant of dropping the proceedings against the respondent. The said letter was an internal correspondence and at the most it can be treated as an indications to the Audit Department that appellant was of the view that the proceedings should be dropped, which course of action was never adopted and in this background, the Audit Department was also being requested before hand to drop the audit objection. The fact remains that appellant never took any decisive steps of dropping the proceedings. Had this been a decision of the appellant, it would have been written as decision in the presence of the respondent. We are, therefore, of the view that the appellant may have come to the conclusion, at that time, to drop the proceedings against the respondent but no such final step was taken by the appellant, in that direction. No other document has been shown to us to suggest that the proceedings against respondent were ever dropped by the appellant, who is the competent-authority. It is thus concluded that the above-said proceedings initiated against the respondent through the show-cause notice dated 10-7-1989, were well within time, were not hit by the period of limitation then prescribed under section 32(3) of the Act and were never dropped. As regards the observations of the learned Single Judge of the High Court that the order-in-original dated 26-9-1992 passed by the appellant was not within a reasonable time from the date of the issuance of notice dated 10-7-1989, the same are neither here nor there. No order can be scraped or annulled or set aside, only on the ground that the same has been passed with unreasonable delay. There is no such concept attached to the judicial and quasi-judicial proceedings, unless provided in the statute. The above-mentioned observations of the learned Single Judge have attained seriousness` because of the contention of the learned Senior Advocate Supreme Court of the appellant that this issue may be involved in a large number of customs cases and the department would suffer because of the above-said observations made in the impugned judgment especially when the judgment has been approved for reporting. It is, therefore, held that the said observations have no value in the eye of law. No other point was urged before us.

In view of the above-mentioned, the impugned judgment dated 10-1-2002 of the Lahore High Court passed in W.P. No. 6490 of 1994 is set aside and the appeal is allowed with costs throughout.

M.H./A-2/SCAppeal allowed.