MUHAMMAD IQBAL VS COLLECTOR OF CUSTOMS (APPEALS), KARACHI, 2012 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 1913 (2012)

Customs Act (IV of 1969)---

----Ss. 193, 194-A & 195-B---Deposit of duty or penalty levied pending appeal---Adjudicating Officer passed the order-in-original and ordered for the recovery of amount being penalty---Being aggrieved by said order, appellant/exporter filed appeal before the Collector of Customs (Appeals), who dismissed the same on account of non-compliance of provisions of 5.195-B of Customs Act, 1969---Validity---Section 195-B of Customs Act, 1969 had provided that pending appeal ,the appellant would deposit with the proper officer the duty demanded or the penalty levied; said section was directory and not mandatory in nature---Non compliance of S.195-B of the Customs Act, 1969 by the exporter, would not frustrate his right of appeal exercised under Ss.193 & 194-A of the Act---Even otherwise, in the present case neither the Customs Authorities attempted to recover duty/penalty during the pendency of appeal nor the Collector (Appeals) directed the exporter for disposing the same before dismissing the appeal on account of non-compliance of 5.195-B of the Customs Act, 1969---Right of appeal could not be taken away, in circumstances---Impugned order was set aside and appeal would be deemed to be pending before the Collector (Appeals) for decision within one month after receipt of order in accordance with law.

PLD 1972 SC 326 ref.

Muhammad Usman Vawala for Appellant.

Iqbal Jamil Abbasi for Respondents.

Date of hearing: 1st August, 2012.

JUDGMENT

CH. IMRAN MASOOD (MEMBER JUDICIAL-I).---This judgment will dispose of Appeal No.K-148 of 2011 filed by the appellant against Order-in-Appeal No.4668 of 2010 dated 11-12-2010 passed by the Collector of Customs (Appeals) Karachi.

2. Brief facts leading to this appeal, as given in the order-in-original, are that from preliminary audit and scrutiny of data provided by Messrs A.K. Motiwala Enterprises Karachi and procured from Messrs PRAL revealed that they had exported 33 consignments of made up jewelry of indigenous gold weighing 434.187 kgs from Pakistan during the period from 1-1-2005 to 31-12-2009, under "Self Consignment Scheme" in terms of S.R.O. 266(I)/2001 dated 7-5-2001. The said company was bound to import into the country foreign exchange involved on the quantity of gold used in the manufacturing of jewelry along with value addition amount (amount of sale proceeds) within 240 days from the date of export in terms of clause 6(iv) of the above mentioned S.R.O. However, the said company failed to import the matching quantity of gold and remittance of foreign exchange (sale proceed) in lieu thereof even after expiry of stipulated time period of 240days as envisaged in the_, aforementioned S.R.O. Accordingly the said company was informed vide letter dated 25-1-2010. Subsequently a Demand-cum-Show Cause Notice was issued wherein the afore-said company was asked to explain his position as to why an amount of Rs.48.137 million should not be recovered from them as penalty for not complying with the aforementioned provisions of S.R.O. 266(I)/2001. After hearing the parties, the adjudicating officer passed the order in original and ordered for the recovery of an amount of Rs.48.137 million being penalty. Being aggrieved by the said order, the appellant filed the appeal before the Collector of Customs (Appeals) who dismissed the same on account of non-compliance of the provisions of section 195-B of the Customs Act, 1969; hence this appeal.

3. The learned counsel for the appellant contended that the provisions of section 195-B of the Customs Act, 1969 so far as they direct the deposit of the amounts of customs duty and the penalty in dispute while pending the appeal are directory and not mandatory. It was asserted by the learned counsel that neither the deposit of the amounts mentioned in section 195-B can be directed as a matter of course nor can the appeal be dismissed simply on account of non-deposit without examining the merits of the case.

4. The learned counsel for the respondent, however, argued that in face of clear language of section 195-B. there is no room for contending that the deposit of amount mentioned therein was not obligatory and was not in the nature of a condition precedent unless dispensed with by the competent authority for deciding the appeal.

5. Before examining the merits of the contentions of the learned counsel for the appellant as well as the respondent regarding inter pretation of section 195-B of the Customs Act, 1969, the section 195-B may usefully be re-produced:-

"195-B. Deposit, pending appeal, of duty demanded or penalty levied.---Where, in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, .pending the appeal, deposit with the proper officer the duty demanded or the penalty levied:

Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he, or it, may deem fit to impose so as to safeguard the interest of revenue:

Provided further that an order dispensing with such deposit shall, without effecting the appeal, cease to have effect on the expiration of a period of six months following the day on which it is made unless the appeal is finally decided earlier and nothing in the order_. dispensing with such deposit which as ceased to have effect shall debar the appropriate officer to recover the amount of the duty demanded or penalty levied.

As per assertion of the learned counsel for the appellant section 195-B of the Customs Act, 1969 is directory and permissive in nature, therefore, the appeal cannot be dismissed by the Collector (Appeals) merely on the basis of non deposit of customs duty or penalty. On the other hand the learned counsel for the respondent claimed that the said provision is imperative and obligatory as it uses the word "shall^" Although it is correct that the use of words like "shall" or "must" are generally considered as mandatory but it is equally well settled that the words "shall" and "may" depending upon the context in which they have been used are often interchangeable. The Hon'ble Supreme Court of Pakistan in (PLD 1972 SC 326) was pleased to hold as under:

"It is now well settled that the words "may" and "shall" in legal phraseology ^.are interchangeable depending on the context in which they are used and or not to be interpreted with the rigidity which is attributed to them in ordinary parlance".

Although section 195-B of the Customs Act, 1969 while directing the deposit of amount of duty in respect of goods. which are not under the control of the Customs authorities or any penalty levied under this Act uses expression "shall", it is silent about the consequences flowing out of its non-compliance. Another well accepted principle of interpretation which becomes applicable is that as the language of section 195-B of the Customs Act, 1969 is in affirmative and not negative, it is deemed to be directory and not mandatory. So it emerges from the above that section 195-B of the Customs Act, 1969 is directory and not mandatory in character.

6. The plain reading of section 195-B of the Customs Act, 1969, reveals that in any appeal before the learned Collector (Appeals) or this Tribunal where the decision or order in dispute relates to any duty demanded in respect of goods which are not under the control of the Customs authorities or any penalty levied under this Act, the appellant, during the pendency of the appeal, is required to deposit with the proper officer the duty demanded or the penalty levied unless it is dispensed with by him, or as the case may be it, otherwise the functionaries of Customs are empowered to recover the^, said amount of duty or penalty under the relevant provisions of the Customs Act, 1969. Non-compliance of section 195-B of the Customs Act, 1969, by the appellant does not frustrate his right of appeal,^, exercised under sections 193 and 194-A of the Customs Act, 1969. Even otherwise in the present case neither the Customs authorities attempted to recover duty/penalty during the pendency of appeal, nor the learned Collector (Appeals) directed the appellant for depositing the same before dismissing the appeal on account of non-compliance of section 195-B of the Customs Act, 1969, therefore, the right of appeal cannot be taken away in these circumstances. Resultantly, the impugned order is^' set aside and the appeal is deemed to be pending before the learned Collector (Appeals) for decision within one month after receipt of order, in accordance with law. No order to costs. Parties be informed through registered post AD or by UMS.

HBT/156/Tax(Trib.)Order accordingly.