Messrs SHAFIQ TEXTILE MILLS LTD., KARACHI VS FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Islamabad and 4 others, 2007 PTD-KARACHI-HIGH-COURT-SINDH 1480 (2004)

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

----Ss. 32 & 217---Claim for refund of export duty---Issuance of show-cause notice under S.32 of Customs Act, 1969 upon making such claim by exporter---Suit challenging such notice---Maintainability---Authority in accordance with law had levied duty on exported goods---Impugned action of authority was in accordance with law and could not be termed as mala fide and was not open to challenge before civil court---Suit was dismissed being non-maintainable.

Malik Muhammad Saeed v. Federation of Pakistan 2006 PTD 2167; Messrs Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 2 others 2000 SCMR 201; Messrs. Binaco Traders v Federation of Pakistan 2006 PTD 1491; Abbasia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus PLD 1997 SC page 3 and Al-Abram Builders (Pvt.) Ltd. v. Income Tax Appellant Tribunal 1993 SCMR 29 ref.

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

----S. 217(2)---Protection of action taken under Customs Act, 1969---Scope---Official act done in good faith would be protected---Section 217(2) of Customs Act, 1969 did require that for claiming protection thereunder, the act must be done in good faith.

(c) Civil Procedure Code (V of 1908)---

----S. 9---Special law providing remedy for redress of grievance---Effect---Plaintiff could not verbally be allowed to circumvent such remedy by invoking jurisdiction of civil court.

Muhammad Sharif for Plaintiff.

Raja Muhammad Iqbal for Defendants.

ORDER

MRS. QAISER IQBAL, J.---In both the captioned suits following common office objections were raised:---

(1)??????? The suit appears to be barred under section 217 of Customs Act, 1969.

(2)??????? Suit is barred by section 56 of the specific Relief Act.

Since both the suits contained identical common office objections, therefore, were heard together for the purpose of adjudication of issues raised.

The common facts given rise to file the present suit are that the, plaintiff in both suits was engaged in the business of manufacture and export cotton yarn and cotton thread, for which different machines are required. Cotton yarn is produced either on "Open end Rotors" or on ring Frame Machines and after production of yarn, "thread" is produced from yarn twisting machines, in the past plaintiff had exported to West Germany and United Kindgom "Cotton Thread" by air and customs authorities did not levy duty on such consignments and it was accepted as "Cotton Thread" by Export Promotion Bureau, Ministry of Commerce, Government of Pakistan who had issued export licence for the consignment. The plaintiff had also exported cotton thread to Iran through land route via Quetta upon which Customs charges were not claimed by the authorities. It is averred that in respect of polyester thread Central Board of Revenue itself has confirmed vide Notification dated 26-6-1993 that thread is entitled to rebate. If polyester thread can be wound on cones, cotton thread can be similarly wounded up. The export of cotton thread was regularly allowed by the defendants from 1977, the Pakistan Central Cotton Committee of Pakistan Institute of Cotton Research and Technology has refined yarn and thread. In addition thereto an independent testing laboratory viz. Paramount Testing Laboratory, has confirmed that commodity as 100% cotton thread on one cone. Ring Spun and count of thread NE 19.66/2. Net weight of cone 1110.0 grams thus the Test Laboratory confirms that commodity export the cotton thread and not yarn per item No.14 of the second schedule of the Customs Act, customs duty on limit of export of cotton yarn manufactured mainly on two kinds of machines referred above. The defendant No.1 to minimize the export of cotton had issued Notification No.674(I)/80 dated 26-6-1980 granting exemption of customs duty on cotton yarn by inserting the word "free" against Item No.14 defendant No.1 vide Notification. S.R.O. No. 738(I)/90 dated 11-7-1990, differentiated and discriminated between cotton yarn production on "Open end Rotors" and "Ring Spinning Frames" and "Ring Spinning Fame Machinery" was considered liable to duty at the rate of Rs.3 per kg. Though under section 18 of the Customs Act read with Item No.14 of second schedule to the Customs Act 1969, there was no reference to production of same yarn on the basis of various types of machines. The plaintiff exported from its foreign buyers in Hong Kong 44000 lbs of cotton Thread in Hank and paid customs duty of the export goods similarly on 39 other consignments, export of cotton thread was effected at the rate of 3 per kg, which was duly paid amounting to Rs.1,779,344 in exercising of the right conferred by the Customs Act plaintiff considered levy of export duty on the cotton thread has as discriminatory and unjust vide its letter dated 17-10-1990 requested the plaintiff No.5 for refund of export duties paid earlier to the plaintiffs claim for refund, several letters were addressed to the defendant No.5 as mien as to Secretary, Ministry of Commerce that on account of illegal discrimination export duty was charged on cotton yarn manufactured on ring frame and exempted from payment of export duty. It is alleged that defendant No.4 issued impugned show-cause notice dated 27-3-1993 alleging mis-declaration of statement and threatened to take criminal action against the plaintiff in terms of section 156 (1) (14) read with section 32 of the Customs Act. It is averred that a claim under section 33 of Customs Act cannot amount mis-declaration under section 32, which section can only be invoked at the time of filing the declaration showing actual loss of duty since duty was duly paid in respect of the above consigmnent, therefore, impugned show-cause notice was based upon mala fides and the act was without jurisdiction on the part of the defendant No.4, the plaintiff has proceeded to file the suit. The case has exchequered history, plaintiff has resorted to file Petition No.4480 of 1995, 2180 to 2187 of 1994 challenged the legality of the Notification, which was allowed to D.B vide order dated 5-9-2002, Collectorate of Customs Export filed Civil Petition to Leave to Appeal before the Honourable Supreme Court, which was granted, the appeal came up for hearing on 21-4-2006, which was allowed, impugned judgment was set aside with the observation that the plaintiff shall be free to avail alternate remedy if available save in accordance with law, plaintiff has resorted to file suit sought declaration that customs duty on the export of cotton thread which is "duty free" item was not liable to be paid and, impugned show-cause notice addressed by defendant No.4 threatening illegal action under section 32 of Customs Act 1969 was without lawful authority and of no legal effect.

Mr. Muhammad Sharif, learned counsel for the plaintiff has contended that this Court in exercise of its jurisdiction as the Court of ultimate jurisdiction is competent to decide all disputed questions of facts and law in controversy. It is contended that Honourable Supreme Court had directed the plaintiff to resort to alternate remedy available to him under the law, therefore, plaintiff has rightly filed the suit and the bar contained under section 217(2) of the Customs Act 1969 is not attracted to the case.

On the other hand Mr. Raja Muhammad Iqbal, learned counsel for the defendant has submitted that suit is not maintainable in view of the provision of section 217 of the Customs Act 1969. It is further contended that plaintiff's had paid export duty and had claimed refund upon mis-declaration of the goods, therefore, suit is incompetent on account of the bar created by Customs Act. In support of the above contention reliance has been placed on the case:

(1)??????? Malik Muhammad Saeed v. Federation of Pakistan (2006 PTD 2167)

(2)??????? M/s. Amin Textile Mills (Pvt.) Ltd. v. Commissioner of Income Tax and 2 others (2000 SCMR 201).

(3)??????? Messrs. Binaco Traders v, Federation of Pakistan (2006 PTD 1491)

I have heard learned counsel for the parties perused the case-law cited at bar.

The plaintiff has sought declaration and challenged the show-cause notice. It is admitted position that show-cause notice was issued to the plaintiff by defendant No.4 on 27-3-1993 threatening for illegal action under section 32 of' Customs Act 1969 before proceeding further sections 217, 218 of the Customs Acts 1969 are produced hereinbelow:-

"217. Protection of action taken under the Act.---(1) No suit, prosecution or other legal proceeding shall lie against the [Federal Government] or any public servant for anything which is done or intended to be done in good faith in pursuance of this Act or the Rules [and notwithstanding anything in any other law for the time being in force no investigation or enquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or directions made or issued thereunder without the prior approval of the Central Board of Revenue].

(2)??????? No suit shall be brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act.

"218.??? Notice of proceedings.---No proceeding in a Court other than a suit shall be commenced against any officer of customs or any other person exercising any powers conferred or discharging any duties imposed by or under this Act for anything purporting to be done in pursuance of the provisions of this Act or the rules without giving to such officer or person a 'month's previous notice in writing of the intended proceeding and of the cause thereof; or after the expiration of one year from the accrual of such cause:

[Provided that this section shall not be deemed to apply in the case of the prosecution of an officer of customs or such other person for any offence punishable under this Act].

It is manifestly clear from the contents of the plaint that upon the refund claimed by the plaintiff show-cause notice dated 27-3-1993 was issued under Customs Act 1969 read with Notification bearing S.R.O. 533 amending S.R.O.499 (I/91 dated 3-5-1991) upon reading of section 217 subsection-1 in exercise of the powers of the authority condition which reflects the cause are intended to be in good faith whereas the condition of good faith is attached to the exercise by the Customs Authority subsection (2) of the section 217 protect the official act done in good faith, whether under section 217 subsection 2 there is no condition that act must be done in a good faith to claim protection. In any view of the matter when special law provides for redress of grievance than one cannot verbally be allowed to circumvent the same by invoking the jurisdiction of Civil Court. In this case the Customs Authorities in accordance with the item No.14 of Second Schedule of Customs Act 1969 had levied the duty on the export of cotton yarn used as raw material for foreign buyers to make the finish goods, customs duty was charged on export at the rate of 3 per Kg, which was duly paid by the plaintiff on exported goods, subsequent thereof plaintiff considering the levy of export duty as discriminatory and unjust vide letter dated 17-10-1990, requested to the defendant No.1 for refund of export duties paid, whereas the defendant No.4 issued the impugned show-cause notice for taking criminal action against the plaintiff on the basis of mis-declaration. The plaintiff has also sought declaration that he was not liable to pay customs duty on the export of cotton thread which is a duty free item in constitutional petitions and the impugned notice of the defendant No.4 was without lawful authority of no legal effect. In any view of the matter whatever action has been taken by the Customs Authorities was in accordance with the Customs Act 1969 and Notification issued thereunder, therefore, element of mala fides on the part of Customs Authorities is missing in the case. In the case of Abbasia Cooperative Bank v. Hakeem Hafiz Muhammad Ghaus (PLD 1997 SC page 3) it has been held that provisions contained in statute ousting jurisdiction of Courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto. In case of Al Ahram Builders (Pvt.) Ltd. v. Income Tax Appellate Tribunal (1993 SCMR 29) Honourable Supreme Court of Pakistan has depreciated the tendency to bye-pass the remedy provided under the relevant statute and to press in service constitutional petitions. The action taken by the Customs Authorities, the same cannot be termed as mala fide and is not open to challenge before a Civil Court in the garb of an order that? the? plaintiff should resort to alternate remedy.

On account of the above discussion, and non-availability of the justifiable reasons assumed the jurisdiction on account of the bar contained in section 217 of Customs Act, 1969, the office objection at serial No.1 is upheld and the suits are held to be not maintainable and are dismissed with no order as to costs.

In view of the above findings, objection No.2 need not to be addressed.

S.A.K./S-24/K??????????????????????????????????????????????????????????????????????????????????????????????? Suits dismissed.