COLLECTOR OF CUSTOMS, APPRAISEMENT COLLECTORATE, KARACHI VS NEW LIGHT HOUSE (PVT.) LTD, LAHORE, 2008 PTD-KARACHI-HIGH-COURT-SINDH 558 (2008)

Customs Act (IV of 1969)---

----Ss.19 & 19-A---Claim for refund of service charges---Entitlement---Assessee would be entitled to such claim after producing documentary evidence regarding non-passing on its levy to consumer.

I.C.I. Pakistan Ltd. v. Pakistan through Secretary to the Government of Pakistan, Ministry of Finance and 3 others 2005 PTD 719 and Pak Suzuki Motor Company Ltd. through SE. General Manager (I&LP), Karachi v. Secretary Revenue Division, Government of Pakistan through Member Customs, Islamabad and another 2007 PTD 501 rel.

Raja Muhammad Iqbal for Applicant.

Nemo for Respondent.

Date of hearing: 24th January, 2008.

JUDGMENT

MRS. YASMEEN ABBASEY, J.---This reference has been made by the Collector of Customs (Appraisement), Karachi against the judgment passed by Customs Appellate Tribunal on 10-5-2007 observing that the Customs Department is not entitled to withhold the refund claim of applicant for 2% of service charges. Reliance was placed on Customs Appeal No. K-300 of 2004 Messrs Pak Suzuki Motor Company Limited v. The Additional Collector of Customs (Appraisement), Karachi that:--

"the departmental representative conceded that a number of such claims including the claims of Messrs Pak Suzuki Motor company Ltd., have been allowed by the respondent's organization. The said claims involved the same issue and all the documents present in this case are the same as presented in other claims. To a query that why a deviation and discrimination is being made in this case the departmental representative had no answer. We would like to observe that it is a very sad state of affairs where a taxpayer is being victimized for no rhyme or reason."

Appeal of the respondent was allowed. Certain legal questions of law were raised out of which question No.2 is material for the purpose of disposal of this reference, which is reproduced as under:--

"Whether the Tribunal erred in law by not considering the provisions of section 19A and subsection (3) of section 19 of the Customs Act 1969."

It is contended by learned counsel that after insertion of section 19-A in the Act 1969 by Finance Act, 2005, every person who has paid the customs duty and other levies on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such customs duty and other levies to the buyer as a part of the price or such goods and as respondent has failed to produce any document to support that he has not passed on the levy of customs duties and other levies to the consumer therefore, he is not entitled for the refund claimed. To support his arguments learned counsel has referred 2005 PTD 719 (I.C.I. Pakistan Ltd. v. Pakistan through Secretary to the Government of Pakistan, Ministry of Finance and 3 others) and 2007 PTD 501 (Pak Suzuki Motor Company Ltd. through SE. General Manager (I&LP), Karachi v. Secretary Revenue Division, Government of Pakistan through Member Customs, Islamabad and another), wherein with reference to the observations made by the Honourable Supreme Court of Pakistan in Fecto Belarus Tractor Ltd v. Government of Pakistan wherein it is observed that:--

"it is to be noted that respondents have placed on record sufficient material which indicates that the petitioner had neither deposited indirect tax i.e., Sales Tax and Customs Duty nor had sold the Tractors at the agreed rate of Rs.230,000. They had been selling the same at a much higher rate ranging between Rs.399,000 to Rs.435,000 and in this manner, they had been earning profit of more than Rs.200,000 per unit. This fact has not been denied by the petitioner as no reply of Civil Misc. Application No.168 of 2000 was filed, has such applying the principle of unjust enrichment, the petitioner is not found entitled for the same as well. However if upon furnishing documentary evidence, petitioner satisfies the concerned authorities of the C.B.R. that the Tractors were sold by it at the agreed rate of Rs.230,000 per unit, inclusive of Customs Duty and Sales Tax then it would be entitled to the refund of service charges, otherwise it would also be liable to pay the balance of the amount acquired by it by selling the Tractors at a price higher than Rs.230,000 contrary to commitment made by it with the Government."

With these observations finally it was held that petitioner is not entitled to the refund of Customs Duty and Sales Tax. However, service charges are refundable subject to the production of documents as discussed above.

In the light of these specific observations there is no cavil to the prepositions that respondent is entitled to refund claim of 2% P. S.I. service charges subject to production of documentary evidence that he had not passed on its levy to the consumer.

In view of foregoing reasons, impugned judgment is set aside and the appeal is hereby allowed.

S.A.K./C-23/KAppeal accepted.