IBRAHIM FIBRES LTD. through General Manager (Imports) VS COLLECTOR OF CUSTOMS (APPRAISEMENT), KARACHI
2009 PTD 1902
[Karachi High Court]
Before Muharram G. Baloch, J
IBRAHIM FIBRES LTD. through General Manager (Imports)
Versus
COLLECTOR OF CUSTOMS (APPRAISEMENT), KARACHI and another
Suit No. 880 of 2001, decided on 16/07/2009.
(a) Customs Act (IV of 1969)---
----S. 30---Protection of Economic Reforms Act (XII of 1992), S.6---S.R.O. No.369(I)/2000, dated 17-6-2000 (as amended by S.R.O.(sic)(I)/2001, dated 29-1-2001)--Customs General Order 12 of 1981, dated 14-9-1981---Specific Relief Act (I of 1877), Ss. 42, 54 & 55---Suit for declaration, mandatory and permanent injunction Maintainability---Suit which was in respect of seeking declaration and other reliefs for the illegal order or issuance of S.R.O. and controversies related thereto could only be decided by way of inquiry and evidence, therefore, Civil Court had the jurisdiction to adjudicate upon such suit---Plea of the department that suit was not maintainable in law was repelled.
K.G. Traders v. Deputy Collector, of Customs PLD 1997 Karachi 541; High Court Appeals Nos. 31, 32 and 33 of 2000 and judgment passed in Suit No.376 of, 2002 rel.
Collector of Customs, Lahore v. Universal Gateway Trading Corporation 2005 SCMR 37; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881 and The Central Board of Revenue Islamabad v. Sheikh Spinning Mills Ltd., 1999 SCMR 1442 distinguished.
(b) Customs Act (IV of 1969)---
---S. 30---Protection of Economic Reforms Act (XII of 1992),, S.6---S.R.O. No.362(I)/2000, dated 17-6-2000 (as amended by S.R.O. (sic)(I)/2001, dated 29-1-2001)---S.R.O.439(I)/2001, dated 18-6-2001---Customs General Order No.12 of 1981, dated 14-9-1981---Constitution of Pakistan (1973), Art.77---Partial shipment of the machinery was made before the amendment of S. R.O.362(I)/2000, dated 17-6-2000, therefore, by virtue of the Protection of Economic Reforms Act, 1992 read with Customs General Order No.12 of 1981. and so also Art.77 of the Constitution, the importer had been protected and had acquired the vested right to clear the consignment in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended vide S.R.O.I/2000, dated 29-1-2001---Promissory estoppel shall operate against the department as notification in shape of S.R.O.439(I)/2001, dated 18-6-2001 could not override the rights which had been acquired by the importer---Notification S.R.O.439(I)/2001, dated 18-6-2001 was not in accordance with law---Principles.
Celanese Pakistan Ltd. v. Government of Pakistan and others 2002 PTD 2874; Gatron and Bhadelia Industries Ltd. v. Government of Pakistan 1999 MLD 2994.(Kar.); Lucky Cement Ltd. v. The Central Board of Revenue PLD 2001 Pesh. 07; Fecto Belarus Tractors Ltd. v. Pakistan through Ministry of Finance Economic Affairs and another SBLR 2001 SC 109 and Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652 rel.
Messrs Jeewajee (Pvt.) Ltd. v. Federation of Pakistan 2006 PTD 518; Anoud Power Generation Ltd. v. Federation of Pakistan' PLD 2001 SC 340; 1992 SCMR 442; Khalid Mehmood v. Collector of Customs, Customs House, Lahore 1999 SCMR 1881; Collector of Customs Faisalabad v. Shamsul Anwar Khan 2006 SCMR 1382; Zaman Cement Company (Pvt.) Ltd. v. Central Board of Revenue 2002 SCMR 312; Cyanamid Pakistan Ltd. v. Collector of Customs (Appraisement) 2002 CLC 1764; Alhamd Textile Mills Ltd. Pakistan through Secretary, Ministry of Finance and others 2001 SCMR 556 and M.Y. Electronics Industries v. Government of Pakistan 1998 SCMR 1404 distinguished.
Khawaja Shamsul Islam for Plaintiff.
Raja Muhammad Iqbal for Defendants.
Date of hearing: 13th, 14th, 19th and 22nd May, 2009.
JUDGMENT
MUHARREM G. BALOCH, J.---Plaintiff above named has filed this suit for declaration, mandatory and permanent injunction with following prayers:--
(I) Declare that the impugned S.R.O. 439(I)/2001, dated 18-6-2001 and Chapter 99(VII) under H.S.C. Code 9907.0060 containing rate of duty 10% ad valorem in respect of plaintiff's consignment being imported under L.C. No.101/912236/786/2000 are unconstitutional, illegal, void ab initio, in complete violation of section 6 of Protection of Economic Reforms Act (XII of 1991), and contrary to law and of no legal effect and issued in complete violation of Article 77 of the Constitution of Islamic Republic of Pakistan.
(II) Declare that the plaintiff acquired vested rights in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended vide S.R.O. (sic)(I)/2001, dated 29-1-2001 read with section 6 of the Protection of Economic Reforms' Act (XII of 1992).
(III) Mandatory 'injunction suspended the operation of impugned notification S. R. O. 439(I)/2001, dated 18-6-2001 and Chapter 99(VII) of Finance Ordinance, 2001 in respect of plaintiff's letter of Credit No. 101/912236/786/2000.
(IV) Permanent injunction restraining the defendants, specially defendant No.1 or their employees, agents, servants, or any other person(s) acting for and on their behalf from making any demand enforcement of the impugned notification S.R.O. 439(I)/2001, dated 18-6-2001 and Chapter 99(VII) of Protection of Economic Reforms Act (XII of 1992) by way of Finance Ordinance, 2001 and/6r from taking any adverse action or action direct or indirect for recovery of the said amount.
(V) Declare that the plaintiff's remaining consignments in respect of contract, dated 16-3-2000 and made effective on 8-8-2000 shall be liable to be cleared in terms of its first shipment bearing Bill of Entry-Cash No. F-344, dated 15-5-2001. IGM No. 804/2001, dated 15-5-2001 be cleared for the same terms and conditions.
Without Prejudice to the foregoing in addition and/or in the alternative.
(VI) Direct the defendant No.1 to immediately release the plaintiff's consignment strictly in terms of section 6 of the Protection of Economic Reforms Act (XII of 1992) read with S.R.O.369(I)/ 2000, dated 17-6-2000 as amended by S.R.O.(sic)(I)/2001, dated 29-1-2001 in line with Letter of Credit No.101/ 912236/786/ 2000 all the consignment be cleared.
(VII) Grant such other relief(s) which this Hon'ble Court may deem fit and proper in the circumstances of the case.
(VIII) Cost of the suit.
2. Precisely, the facts of the present suit are that the plaintiff is a fibre manufacturing unit located at Shah Kot Tehseel Jarranwala, District Faisalabad engaged in the business of manufacturing textile products. It is pleaded by the plaintiff that the plaintiff has earned a good reputation in the polyester fibre manufacturing sector and in this regard earned various meritorious certificates and the unit of the plaintiff is working 24 hours a day and providing jobs to the hundreds of workers resulting 'contribution to its drive against unemployment. He further pleaded that the plaintiff being a taxpayer is entitled for natural justice. It is the case of the plaintiff that the plaintiff company was established to set up polyester staple fibre unit with estimated cost of the project was Rs.3 billions with 57% foreign investment. The daily production capacity of the project is 200 tons with the result the plaintiff's project saved foreign exchange of Pakistan in the imports of polyester fibre. To achieve this object, certain reliefs by way of concessions and exemptions from the duties are granted from time to time by the Federal Government i.e. defendant No.2.
3. The plaintiff in order to avail the said incentives took major steps such as purchasing land, erecting building and importing the requisite machinery and mill works for production of polyester staple fibre the said plant and machinery was imported for installation in rural areas which is exempted from all duties and taxes in terms of S.R.O.484(I)/92 issued on 14-5-1992. The said S.R.O. is in furtherance of economic policies announced by the Government of Pakistan for promotion of industrialisation in the country. It is the case of the plaintiff that since S.R.O.484(I)/92 was issued after 7-2-1990, it could not. have been altered or changed to the manifest, disadvantage and vested rights and specially in the case of the plaintiff under Protection of Economic Reforms Act, 1992 (Act XII of 1992).
4. In terms of S.R.O.484(I)/92 the plaintiff's mill being admittedly in rural area is exempted from all custom duties on import of machinery for installation in the industry. The plaintiff in this regard has imported complete polyester staple fibre manufacturing plant in the year, 1995 under L/C No.FSD/07/94. The plant was imported in several shipments, the plaintiff claimed the benefit of S.R.O.484(I)/92 read with Customs General Order No.12 of 1981 read with S.R.O.569(I)/95 and accordingly the exemption from customs duty and sales tax was granted under S.R.0.978(I)/95 and S.R.O.569(I)/95. The defendants treated the plant and machinery as a unit locally manufactured. As mentioned above the plaintiff filed Bill of Entry for the import of complete polyester staple fibre plant on 21-6-1995 and claimed exemption.
5. The plaintiff's plant is installed in rural area, therefore, the defendant No.2 by its various industrial policies, introduced number of rural industrial scheme by their industrial policy Circular No.6(12)/90-P, dated 4-6-1990, 31-7-1990, 17-12-1990 and 5-1-1991 whereby the industrialists were offered various tax holidays.
6. The plaintiff's plant comprises of complete polymerization unit spinning, drawing, utilities air conditioning, chilling etc., along with other polyester manufacturing' line and the plaintiff in continuation to their earlier import in the year 1995 are importing for the' purpose of expansion a complete plant in CKD condition. The plant is of origin of German technology which, is fully computerized not at all being manufactured locally .as admittedly the plant is being controlled by computer. The plaintiff has imported the parts of the plant given in the Bill of entry, dated 10-5-2001 under IGM No.804/2001, dated 15-5-2001 for expansion of the above mentioned unit. The plaintiff further pleaded that complete plant will be shipped in part shipments along with all accessories and parts. However, for the present controversy first shipment has already arrived on 15-5-2001 accordingly bill of entry filed vide Machine No.KAPR HC-102468, dated 10-5-2001, the plaintiff in continuation to their original plant based in 1995 claiming benefit of S. R.0.369(1)/2000, dated 17-6-2000 as amended, S.R.O. (sic)(I)/2001, dated 29-1-2001, 'S.R.O. 987(I)/99, dated 30-8-1999 and Customs, General Order No. 12 of 1981, Customs General Order No. 12 of 1981 has not been rescinded and is still operative S.R.O.'s 369(I)/2000. S.R.O. (sic)(I)/2001 and S.R.0.987(I) all are under the scope and ambit of this Customs General Order and its concessionary terms apply in tote at all plant expansion being undertaken. Accordingly partial consignment was cleared, duty was exempted on 15-5-2001 and the benefit of S.R.O.369(I)/2000, dated 17-6-2000 as amended by S.R.O. (sic)(I)/2001, dated 29-1-2001 was given. The defendant No.1's officers very minutely and thoroughly examined and physically verified the consignment in this regard different appraisers appraised the consignment and put on their own different notings on the reverse side of the bill of entry. It is the case of the plaintiff that all of a sudden the defendant No. 2 through Finance Ordinance, 2001 for the year beginning from the first day of July, 2001 amended through section 4 of the said Ordinance, Customs Act, 1969 and by way of subsection (9) of section 4 of the Finance Ordinance, 2001, the First Schedule has been substituted and additional chapter 99 has been introduced. Initially the plaintiff's consignment was cleared/assessed in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended by S.R.O.(sic)(I)/2001. In the said Chapter 99 sub-chapter (VII) under heading project imports the consignment of the plaintiff shall also fall in new H.S. Code i.e. 9907.0060 as well as P.C.T. Heading i.e. 8444.000 which are subject to 10% ad valorem. Not only this, on 18-6-2001 defendant No.1 also issued an S.R.O.439(I)/2001 and suppressed its earlier notification S.R.O.369(I)/2000, dated 17-6-2000 by way of which value added industries specified in column (2) of table (II) shall be exempted from so much of the customs duties leviable under the First Schedule to the said Act as are in excess of 5% ad-valorem, the cumulative effect of both the said laws definitely affects the plaintiffs vested rights which have already accrued to them in view of S.R.O. 369(I)/2000, dated 17-6-2000 as amended by S.R.O.(sic)(I)/2001, dated 29-1-2001. It is the case of the plaintiff that in sub-chapter (VII) of Finance Ordinance, 2001 under the heading project imports read with note 2 clearly supported the case of the plaintiff that neither sub-Chapter VII of Chapter 99 nor new S.R.O.439(I)/2001 affected the plaintiff's vested rights. The said notes 1 and 2 are reproduced as under:--
(1) Goods covered by this sub-chapter include the machinery and equipment meant for setting up of a complete plant. Any machine meant for balancing modernization, replacement or expansion of existing plant is excluded.
(2) At the time of arrival of first partial shipment of the plant, the importer shall furnish complete details of the whole machinery, equipment, and component parts required for the plant, duly supported by the contract and layout plan and drawings.
(7) According to the plaintiff bare perusal of the above said notings clearly stipulates that the plaintiff's remaining partial shipments which are in continuation with their earlier consignment/machinery are clearly excluded from the operation of chapter 99 by way of Finance Ordinance, 2001 as well as S.R.O. 439(I)/ 2001 both, dated 18-6-2001.
(8) The plaintiff in order to avail the abovesaid benefit in continuation of their first Bill of Entry bearing IGM No.804/ 2001, dated 15-5-2001 filed in advance, Bill of Entry in terms of section 79(2) and claimed exemption as guaranteed in S.R.O.369(I)/2000, dated 17-6-2000 as amended by S.R:O.(sic)(I)/2001, dated 29-1-2001 read with C.G.O. 12/81 and further read with Chapter 99(VII) under the heading project imports notes 1 and 2. But to the surprise of the plaintiff, the officers of the defendant No.1 refused to extend benefit and refused to clear the consignment in terms of first bill of Entry No. KAPRH-H.C. 102468, dated 10-5-2001.
9. The plaintiff further pleaded that as mentioned above all of sudden in pursuance of Proclamation of Emergency of 14-10-1999 and the Provisional Constitution Order No.1/99 read with Provisional Constitution (Amendment) Order No.9 of 1999 and in exercise of powers enabling him in that behalf of the President of the Islamic Republic of Pakistan promulgated the Finance Ordinance which shall come into force at once except the provision of sections 3 and 5, which shall come into force on 1-7-2001 and by notification respectively amended certain laws which have already been 'mentioned. Along with said Ordinance as already mentioned by merely an executive act further notification S.R.O. No.439(I)/2001, dated 18-6-2001 carrying the same date was introduced which superseded S.R.O.No.369(I)/2001, dated 17-6-2000 as amended by S.R.O. (sic)(I)/2001, dated 29-1-2001. It is the case of the plaintiff that being well-settled principle by the superior Courts that a tax or duty can only be imposed under the authority of an Act of Parliament in view of Article 77 of the 1973 Constitution. This being an essentially legislative power cannot be delegated to a subordinate authority empowering it to levy the tax or duty. There is, however, no objection in delegating exemption. There is much difference in "taxability" or `liability" and its payability. The taxability or liability is created by the legislator while payability follows to be enforced by the executive authority after quantification. The exemption concerned not the liability but only the payability which means that though an assessee is liable to pay, he can be excused payment on account of a power conferred on the subordinate legislature authority. In the present case, it is a settled rule that an executive authority cannot in exercise of the rule making power or the Tower to amend, to vary or rescind an earlier order, take away the rights vested in the citizen by law. If a person had acquired a vested right of non-taxability, hence the vested right could not therefore be taken away by an executive action. It is further pleaded by the plaintiff that while issuing Finance Ordinance, 2001 and S.R.O. 439(I)/2001 the defendants completely ignored section 6 of the Protection of Economic Reforms Act (XII of 1992). Section 6 clearly shows that fiscal incentives for investment provided by the Government to the statutory orders listed for the schedule or otherwise notified shall continue in force for the terms specified therein and shall not be altered to the disadvantages of the investors. Notification No. S.R.O.369(I)/2000, dated 17-6-2000 as amended by S.R.O. (sic)(I)/2001, dated 29-1-2001 clearly proves the fact that the defendant No.2 extended statutory commitment/promises to the plaintiff of the said notification. The effect of the aforesaid notification that on satisfaction of certain conditions laid down therein the exemption from whole of customs duty, taxes, charges was to be enjoyed by a certain category approved industrial categories mentioned in the schedule appended thereto. The Executive Authority of the Federation in the exercise of its delegated power under section 19 of the Customs Act, 1969 could not withdraw, suppress and rescind the exemption to the disadvantage of the beneficiaries. The plaintiff thus pleads that in this context and the impact of section 6 of the Protection of Economic Reforms Act, (XII of 1992) clear enough and suffered from no ambiguity, therefore, exemption granted under notification No. S.R.O. 369(I)/2000, dated 17-6-2000 further amended by S.R.O. (sic)(I)/2001, dated 29-1-2001 read with C.G.O. No.12/81 could not be altered, rescinded, suppressed to the disadvantage of the beneficiary/plaintiff as admittedly the, plaintiff already fulfilled all the conditions under the said notification which can be borne opt from the fact that there is first consignment cleared without any objection. The plaintiff further pleaded that in terms of section 21 of the General Clauses Act vested rights created by statutes cannot be taken away arbitrarily and unilaterally, the issuance of new Ordinance, 2001 and the S.R.O. 439(I)/2001, dated 18j-6-2001 is also violative of Article 77 of the Constitution. Thus the plaintiff has prayed for declaration that the impugned S. R. 0.439(I)/2001, dated 18-6-2001 and Chapter 99 under H.S.C. Code 9907.0060 containing rate of duty 10% ad valorem in. respect of plaintiff's consignment being imported under L.C. No.101/912236/786/2000 are illegal and other reliefs.
10. The defendants filed their written statement to the above suit and raised preliminary objections and so also controverted the factual and legal pleas. According to the defendants the suit is not maintainable under section 217 of the Customs Act, 1969; the suit is barred under section 9 of C.P.C.; and that the suit may not be filed without prior notice under section 80 of C.P.C., therefore, the suit on above legal pleas is liable to be dismissed.
11. The defendants while refuting the allegations of the plaintiff have explained that the plaintiff claims the exemption of duty on import of partial consignment of polyester staple fibre plant vide Bill of Entry No.118542, dated 28-6-2001 and claimed S.R.O.369(I)/2000, dated 17-6-2000 and S.R.O.439(I)/2001, dated 18-6-2001 for exemption of duty and S.R.O.987(I)/99, dated 30-8-1999 for exemption of sales tax against indemnity bond. According to the defendants at the time of import of the above in terms of S.R.O.439(I)/2001 was prevailing which allows exemption from duty in excess of 5% as such customs duty @ 5% is chargeable terms of section 30 read with section 31-A of the Customs Act, 1969, but the plaintiff claimed total exemption from duty under S.R.O.369(I)/2000 which was valid upto 17-6-2001, therefore, the said consignment is subject to the terms and .conditions of S.R.O. No.439(I)/2001 in terms of the aforesaid sections of the Customs Act, 1969 and 5% concessionary customs duty is leviable. It is further pleaded by the defendants that the notification S.R.O.369(I)/2001, dated 17-6-2000 was superceded by S.R.O.439(I)/2001, dated 18-6-2001 in which concessionary customs. duty @ 5% was levied. The plaintiff imported a consignment of machinery (partial shipment of polyester fibre plant) and filed bill of entry under section 79(2) of the Customs Act, 1969 (Machine No. 118426, dated 28-6-2001) when the said S.R.O. 439(I)/2001, dated 18-6-2001 was prevailing. As such concessionary customs duty @ 5% was chargeable in terms of section 30 read with 31(A) of the Customs Act, 1969, which is reproduced as under: --
Section 30. Date of determination of rate of import duty. The rate of duty applicable to, any imported goods shall be the rate of duty in force:
(a) in the case of goods cleared for home consumption under section 79, on the date on which a bill ,pf entry is manifested under that section; and
(b) in the case of goods cleared from a warehouse under section 104, on the date on which a bill of entry for clearance of such goods is manifested under that section:
Provided that, where a bill of entry has been filed in advance of the arrival of the conveyance by which the goods have been imported, the relevant date for the purpose of this section shall be the date on which the manifest of the conveyance is delivered:
Provided further that, in respect of goods for the clearance of which a bill of entry for clearance has been manifested under section 104, and the duty is not paid within seven days of the bill of entry being manifested, the rate of duty applicable shall be the rate of duty on the date on which the duty is actually paid:
Provided further that the Federal Government may, by notification in the official Gazette, for any goods or class of goods, specify any other date for the determination of rate of duty."
Explanation.---For the purpose of this section "manifested" means that when a machine number is allocated to bill of entry and is registered in customs record.
Section 31-A, Effective rate of duty.---(1) Notwithstanding, anything contained in any other law for the time being in force or any decision of any Court, for the purposes of sections 30 and' 31, the rate of duty applicable to any goods shall include any amount of duty imposed under section 18, 2(****)and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit in respect thereof.
(2) For the purpose of determining the value of any imported or exported goods, the rate of exchange at which any foreign exchange is to be converted into Pakistan currency shall be the rate of exchange in force--
(a) in the case of goods referred to in clause (a) of section 30, 3 (immediately preceding the date), referred to in that clause.
(b) in the case of goods referred to in clause (b) of the aforesaid section, 4(immediately preceding the date) referred to. in that clause; and
(c) in the case of goods referred to in. section 31, on the date referred to in that section.
12. According to the defendants the customs duty etc. is chargeable which is leviable on the date of manifest or Import General Manifest (IGM) date of bill of entry, as the case may be, and the customs duty at 5% is correctly chargeable as explained under section 30 read with 31-A. The defendants further pleaded that the President of Islamic Republic of Pakistan through Finance Ordinance, 2001 has superseded the S.R.O. 369(I)/2000 by S.R.O.439(I)/2001, dated 18-6-2001 which levied concessionary customs duty @ 5%. The issuance of S.R.O.4.39(I)/2001, dated 18-6-2001 is as per law in terms of sections 18(2) & 19 of the Customs Act, 1969. According to the defendants in terms of section 30 read with 31-A of the Customs Act, 1969, customs duty etc. is chargeable prevailing on the date of filing of bill of entry. The filing date of the plaintiff's consignment was 28-6-2001 when S.R.O.439(I)/2001 prevaild as such 5% customs duty was chargeable. The contention of the plaintiff is incorrect and not as per law and the same is misleading as well. It is further 'pleaded by the defendants that section 6 of Economic Reforms Act, 1992 was for the protection of policies envisaged under S.R.O.1284(I)/90, dated 13-12-1990 as is clearly mentioned in the schedule thereof. S.R.O.1284(I)/90 superceded by S.R.O. 484(I)/92, dated 14-5-1992 which was valid upto 30-6-1995. The Economic Reforms Act was to protect the policies of rural industrialization envisaged under S.R.O.1284(I)/90, dated 13-12-1990 superseded by S.R.O. 484(I)/92, dated 14-5-1992 read with Ministry of Industries Circular No.6(100)/90-Policy, dated 2-6-1991. The scheme was valid upto 30-6-1995. On the contrary the S.R.O.369(I)/2000 superceded by S.R.O.439(I)/2001 are for manufacturing of value added category products and export oriented category industry. This envisages entirely different schemes and have nothing to do with Circular 1284(I)/90 accordingly nor such any end date was specified in S.R.O.369(I)/2000. The protection of Economic Reforms Act, 1992 does not relate to S.R.O.439(I)/2901. Thus, the plaintiff's contention is entirely misleading. The defendants further refuted the contents of the plaint and prayed that in the light of above submission the suit of the plaintiff be dismissed which lacks merits and total amount of duty and taxes Rs.1,67,21,979 up-till now is involved in two consignments released as per orders of this Court, dated 3-7-2001, therefore, the defendants requested that the suit may be dismissed and the plaintiff be directed to pay the duty and taxes accordingly.
13. On the pleadings of the parties, the Court vide order, dated 15-6-2006 framed the following issues:--
(1) Whether the suit is not maintainable?
(2) Whether the plaintiff has acquired vested right to clear the suit consignment in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended vide S.R.O. (sic)(I)/2001, dated 29-1-2001 read with section 6 of the Protection of Economic Reforms Act, 1992 read with Customs General Order No. 12 of 1981?
(3) Whether S.R.O. 439(I)/2001, dated 18-6-2001 is not in accordance with law?
(4) What should the decree be?
14. Since all the three issues pertain to the interpretation of S.R.Os. and the claim of the parties through Customs Act, therefore, learned counsel for the parties did not lead any evidence but opted to argue the matter straightaway.
15. I have heard Mr. Khawaja Shamsul Islam, learned counsel for the plaintiff, and Mr. Raja Muhammad Iqbal, learned counsel for the defendants, and with their assistance perused the material available on record.
16. My findings on the above issues with reasons are as under:--
| Issue No.1: | Negative |
| Issue No.2: | Affirmative |
| Issue No.3: | Affirmative |
| Issue No.4: | Suit decreed as prayed. |
ISSUE NO.1
This issue is framed from the pleadings of the defendant whereby it was pleaded by the defendants that the suit is not maintainable and barred under section 217 read with section 216 of the Customs Act, 1969 whereby the protection of action taken under the Act by the customs officials was provided in the provisions of section 217 which is reproduced hereunder:--
"(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 Board.
(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."
Learned counsel for the defendant contended that the plaintiff if was aggrieved could have availed remedy which was available to it under sections 193, 192(a), 194, 194(a) of the Customs Act, 1969. In the present case without availing the above mentioned remedies, the plaintiff has directly filed this suit which is not maintainable under the law. On the above point learned counsel for the defendant has relied upon Collector of Customs, Lahore v. Universal Gateway Trading Corporation (2005 SCMR 37), Khalid Mehmood v. Collector of Customs, Customs House, Lahore (1999 SCMR 1881) and The Central Board of Revenue Islamabad v. Sheikh Spinning Mills Ltd. (1999 SCMR 1442).
As against above submission of the learned counsel for the defendant, learned counsel for the plaintiff has submitted on the point that barring provisions under section 217 of the Customs Act, 1969, are inapplicable to the facts of the present case. According to him the provisions of section 217 of the Customs Act, 1969 shall be applicable when' there is a show-cause notice issued under section 34 of the Customs Act, 1969, and in the case of the plaintiff no show-cause notice was ever issued, therefore, the provisions of section 217 of the Act are inapplicable and being misconceived. Learned counsel for the plaintiff further submitted that since the acts of the officials of the defendant No.1 are mala fide, therefore, this Court has jurisdiction to address such issue when the mala fides are alleged. Besides, learned counsel for the plaintiff also argued that the Civil Court is the Court of ultimate jurisdiction, therefore, filing of the present suit is very much within the ambit of the jurisdiction of the Civil Court. In support of his arguments he has relied upon K.G. Traders v. Deputy Collector of Customs (PLD 1997 Karachi 541) and unreported D.B. decision made in High Court Appeals Nos.31, 32 and 33 of 2000 and judgment passed in Suit No.376 of 2002 by learned Single Judge of this Court. According to the plaintiff when the authority has passed the order which is on the face of it illegal and unconstitutional and whereby the mala fides are alleged then the only Court which can resolve the dispute is the Civil Court.
I have gone through the above case-law cited by learned counsel for the parties respectively and in my humble view the case-law relied upon by learned counsel for the defendant is distinguishable from the facts of the present case. The case-law relied upon by the learned counsel for the defendant is that the acts of the officials of the customs department cannot be challenged in the writ jurisdiction whereas the present suit is in respect of seeking declaration and other reliefs for the illegal order or issuance of S.R.O. and the above controversies could only be decided by way of inquiry and evidence, therefore, relying the case-law cited by learned counsel for the plaintiff I am in full agreement with him that the Civil Court has the jurisdiction to adjudicate upon this suit. The plea of the defendants that the suit is not maintainable in law is hereby repelled. Consequently, the issue in hand is answered in negative.
ISSUE NO.2
The case of the plaintiff from the facts of the plaint as mentioned supra reveal that the plaintiff established the industry in a rural area located at Shah Kot Tehseel Jarranwala, District Faisalabad, and the above unit is working 24 hours a day and providing jobs to the hundreds of workers resulting contribution to its drive against unemployment. The plaintiff further contended that the plaintiff being a tax-payer is entitled for natural justice by which he was given protection from the payment of customs and taxes and exempted from all duties and taxes in terms of Notification/S.R.O. No.484(I)/92 issued on 14-5-1992. The said S.R.O. is in furtherance of the economic policy announced by the Government of Pakistan for promotion of Industrialization in the country. According to the plaintiff, since the said S.R.O. could not have been altered or changed to the manifest, disadvantage and vested rights and specially in the case of the plaintiff under Protection of Economic Reforms Act, 1992 (Act XII of 1992). The case of the plaintiff is that the machinery for which he established the 'industry was not locally manufactured and thus imported the same for installation in the factory in a rural area is exempted from all duties and taxes, therefore, the plaintiff claims exemption as provided in the above mentioned S.R.O. of 1992 read with Customs General Order Customs General Order No. 12 of 1981 which speaks as under:--
"Customs General Order No.12 of 1981
Dated 14th September, 1981
Consequent upon introduction of the condition of Balancing, Modernization and Replacement in S.R.O. 695(I)/77, dated 4th August, 1977, an issue arose as to what extent the spare parts should be admissible to the same concession as is available to the main plant and machinery with which these are being imported.
(2) The issue has been examined in detail. It has been decided that the benefit of the same concession as admissible on the plant and machinery should be given to so much of the spares as are provided for in the original sanction.
(3) It is accordingly directed that all such spare parts as are being imported, as a part of original sanction for initial installation, expansion or BMR of a project should be given the same concession as is admissible to the main plant and machinery. This concession will be applicable to the import of spares under all the S.R.Os. relating to concessions on machinery for initial installation, expansion or BMR."
The plaintiff further contended that for the protection of the benefit of the plaintiff notification in terms of S.R.O. 369(I)/2000, dated 17-6-2000 as amended vide S.R.O. (sic)(I)/2001, dated 29-1-2001 read with section 6 of the Protection of Economic Reforms Act (XII of 1992) was promulgated whereby the value added industry specified in column (2) of Table 2 shown in the above notification shall be exempted from so much of the customs duties leviable under the first schedule of the said Act as are in excess of five per cent ad valorem. The case of the plaintiff is that the above exemption also gives benefit to the plaintiff as his unit is in respect of textiles shown at Sr. No.4 i.e. men-made staple fibres.
The plaintiff submitted that in order to import the entire plant and the machinery for the purpose of establishing the plaintiff's unit, the plaintiff has opened L.C. bearing No. 101/912236/786/2000, dated 8-6-2000. By virtue of the above L.C. the lot No.1 comprising of partial shipment of complete polyester staple fibre manufacturing plant and allowed by the defendants for clearance based upon S.R.O. No.(sic)(I)/2001, dated 29-1-2001, therefore, further partial shipments of Lot No.1 under the same L.C. were also entitled to be released on the same basis and on the same S.R.O./C.G.O. irrespective of S.R.O.439(I)/2001. The plaintiff further contended that the plaintiff has 'acquired vested right whereby partial shipment of his machinery was allowed by the defendants and through the same L.C. the defendants are bound to allow the remaining shipment as provided by S.R.O., dated 17-6-2000 as amended vide S.R.O./01, dated 29-1-2001 the plaintiff further contended that his rights are also protected under section 6 of the Protection of Economic Reforms Act, 1992, read with Customs General Order No. 12 of 1991. The provisions of section 6 of the Protection of Economic Reforms Act, 1992 (Act XII of 1992) are reproduced as under: --
"(6) Protection of fiscal incentives for setting up of industries.---The fiscal incentives for investment provided by the Government through the statutory orders listed in the schedule or otherwise notified shall continue in force for the term specified therein and shall not be altered to the disadvantage of the investors."
According to the plaintiff the fiscal incentives for investment provided by the Government through the statutory orders shall not be altered to the disadvantage of the investors' benefits, the plaintiff further contended that he has also acquired vested rights by virtue of provisions of Article 77 of the Constitution of Islamic Republic of Pakistan, 1973, and it will be advantageous to reproduce the same as under:--
"77. Tax to be levied by law only. No tax shall be levied for the purposes of the Federation except by or under the authority of Act of Majlis-e-Shoora (Parliament)."
The plaintiff in view of the above provisions of Article of the Constitution of Pakistan submitted that the defendant's act whereby they are claiming the duties and taxes are illegal because the notification cannot override the previous benefit/protection given to the plaintiff but it could have only been taken away by the Federation, of Pakistan through an authority of Act of Majlis-e-Shoora/Parliament and in the present case there is no Act passed by the Parliament, therefore, the notification in terms of S.R.O.439(I)/2001, dated 18-6-2001 is not applicable to the facts of the case of the plaintiff. In support of his case the plaintiff has relied upon unreported D.B. decision made in High Court Appeals Nos. 31, 32 and 33 of 2000 and judgment passed in Suit No.376/2002 by learned Single Judge of this Court and PTCL" 2002 CL 371, K.G. Traders v. Deputy Collector of Customs (PLD 1997 Karachi 541), Gatron and Bhadelia Industries Ltd. v. Government of Pakistan (1999 MLD 2994), Army Welfare Sugar Mills Ltd. v. Federation of Pakistan (1992 SCMR 1652) and Polyron Ltd. v. Government of Pakistan (PLD 1999 Karachi 238), Modern Continental Business (Pvt.) Ltd. v. Collector (Adjudication) (2003 PTD 1267).
As against the defendants have contended that the notification issued subsequently withdrawing the exemption shall prevail and on this point the defendants have relied upon Messrs Jeewajee (Pvt.) Ltd. v. Federation of Pakistan (2006 PTD 518), Anoud Power Generation Ltd. v. Federation of Pakistan (PLD 2001 SC 340), (1992 SCMR 442), Khalid Mehmood v. Collector of Customs, Customs House, Lahore (1999 SCMR 1881), Collector of Customs Faisalabad v. Shamsul Anwar Khan (2006 SCMR 1382), Zaman Cement Company (Pvt.) Ltd. v. Central Board of Revenue (2002 SCMR 312), Cyanamid Pakistan Ltd. v. Collector of Customs (Appraisement) (2002 CLC 1764), Alhamd Textile Mills Ltd.. Pakistan through Secretary, Ministry of Finance and others (2001 SCMR 556) and M.Y. Electronics Industries v. Government of Pakistan (1998 SCMR 1404).
I have candidly gone through the case-law relied upon by the learned counsel for the respective parties and am of the view that the law relied upon by learned counsel for the defendant is distinguishable from the facts of the present case because in most of the citations it was held that since the import of the machinery was made after exemption was taken away by the Government and in the present case the partial shipment of the machinery was made before the amendment, therefore, by virtue of the Protection of Economic Reforms Act, 1992 read with Customs General Order No.12 of 1981 and so also Article 77 of the Constitution of the Islamic Republic of Pakistan, 1973, the plaintiff has been protected and has acquired the vested right to clear the said consignment in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended vide S.R.O.(sic)(I)/2001, dated 29-1-2001 by relying on the case-law Celanese Pakistan Ltd. v. Government of Pakistan and others (2002 PTD 2874), Qatron and Bhadelia Industries Ltd. v. Government of Pakistan (1999 MLD 2994 (Karachi), Lucky Cement Ltd. v. The Central Board of Revenue (PLD 2001 Peshawar 07), Fecto Belarus Tractors Ltd. v. Pakistan through Ministry of Finance Economic Affairs and another (SBLR 2001 SC 109), Army Welfare Sugar Mills Ltd. v. Federation of Pakistan 1992 SCMR 1652 wherein it was held in favour of the importer that the promissory estoppel shall operate against the Government in case the exemption from payment of excise duty or any other tax has been granted for a specified period on certain conditions and if a person fulfils those conditions he acquires a vested right, he cannot be denied the exemption before expiry of the specified period through an executive order like notification but he can be denied his vested right by legislative provisions.
Admittedly in the instant suit the promissory estoppel shall operate against the defendants as the notification in shape of S.R.O.439(I)/2001, dated 18-6-2001 cannot override the rights which have been acquired by the plaintiff. In such circumstances, as discussed above in the light of the case. I am of the considered view that the plaintiff has acquired vested rights to clear suit consignment in terms of S.R.O.369(I)/2000, dated 17-6-2000 as amended vide S.R.O. (sic)(I)/2001, dated 29-1-2001 read with section 6 of the Protection of Economic Reforms Act, 1992 read with Customs General Order No. 12 of 1981. Consequently, the issue is answered in affirmative.
ISSUE NO.3.
As discussed in issue No.2, the notification in shape of S.R.O.No.439(I)/2001, dated 18-6-2001 is not in accordance with law and cannot take away the rights acquired by the plaintiff, therefore, considering the material and the law cited by the plaintiff I am of the view that the above notification is not in accordance with law, therefore, the issue is answered in affirmative.
ISSUE NO.4
In view of discussion and findings on Issues Nos.1, 2 and 3, the suit of the plaintiff is hereby decreed as prayed, however, with no order as to costs.
M.B.A./I-25/KSuit decreed.