ASIF TRADERS VS COLLECTOR OF CUSTOMS through Assistant Collector, 2014 PTD-KARACHI-HIGH-COURT-SINDH 1057 (2013)

(a) Notification---

----Retrospective effect---Principle---Notification which confers a benefit or right to a person can be given retrospective effect, whereas the notification which disturbs or impairs a vested right of a person or creates new liability cannot be applied retrospectively in absence of legal sanction to such effect.

Collector of Customs, Lahore and others v. Mrs. Shahida Anwar 2012 SCMR 1698 rel.

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

----Ss.181 & 196---Notification S.R.O. 794(I)/2011, dated 25-8-2011---Confiscation of goods---Old and used spare parts---Retrospective effect of notification---Goods imported were used circuit breakers and adjudication officer confiscated the same and also imposed fine on the ground that importer had deliberately imported banned items---Collector (Appeals) extended benefit of Notification S.R.O. 794(I)/ 2011, dated 25-8-2011, to importer and ordered release of goods subject to payment of fine equal to 20% of thevalue but appellate Tribunal set aside the order passed by Collector (Appeals)---Validity---Notification S.R.O. 794(I)/2011, dated 25-8-2011, was a beneficial notification whereby it had allowed redemption of confiscated goods on payment of fine, therefore, it could be given retrospective effect as the case of importer was pending at appellate stage---Collector (Appeals) had correctly allowed benefit of the notification to importer---Provision of notification S.R.O. 794(I)/2011, dated 25-8-2011, was applicable on old and used spare parts for use in second hand plant and machinery used in manufacturing of goods---Benefit was on parts which were used in machinery and which in turn was used in manufacture of goods---No restriction was imposed that notification S.R.O. 794(I)/2011,dated25-8-2011, was only applicable if such parts were imported by manufacturers for their machinery exclusively---Machinery was a freely importable item generally and could be imported by a manufacturer as well as by a commercial importer---High Court set aside the order passed by Appellate Tribunal---Reference was allowed in circumstances.

Messrs Hashwani Hotels Limited v. Government of Pakistan and others 2007 PTD 1473; Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 and Anoud Power Generation Limited and others v. Federation of Pakistan and others PLD 2001 SC 340 ref.

Muhammad Afzal Awan for Applicants.

Kashif Nazeer for Respondents.

Date of hearing: 26th November, 2013.

JUDGMENT

MUHAMMAD JUNAID GHAFFAR, J.---The instant Special Customs Reference Applications ("S.C.R.A") have been filed under section 196 of the Customs Act, 1969 ("the Act") against the order dated 13-12-2012 passed by the Customs Appellate Tribunal (Bench II) Karachi, ("Tribunal") in Customs Appeals Nos.K-1398 and 1399 of 2011.

2.The applicants have proposed as many as 11 questions of law purported to be arising out of the order of the Tribunal. However, with utmost respect we are of the opinion that only questions Nos.8 and 11 are relevant and we have rephrased them in the following manner:--

(1)Whether the benefit ofS.R.O. 794(I)/2011 dated 25-8-2011 is also applicable to commercial importers or not?

(2)Whether the benefit of S.R.O. 794(I)/2011 dated 25-8-2011 can be given retrospective effect and the applicants consignment can be allowed to be released on payment of redemption fine under S.R.O. 499(I)/2009 dated 13-6-2009?

3.Briefly, the facts as per the statement of the case is that the applicants imported a consignment of Machinery and parts comprisingof 13 different items and filed Goods Declaration ("GD") vide No.1766106-280311 and on examination of G.D, it was alleged that the applicant had mis-declared the description of item atserialNo. 13ofthe G.D, as it had declared the same as "New Circuit Breakers above 10 AMP", whereas the goods were "Used Circuit Breakers" which were not importable in terms of appendix C of the Import Policy Order, 2009-2010 ("IPO"). Thereafter Show-Cause Notices were issued to the applicants and two Order-in-Originals bearing No.67143 of 2011 dated 14-5-2011 and 66884 of 2011 dated 12-5-2011 were passed wherein the operative part was in the following terms:--

"I have gone through the available record and seen details of the case, the examination report, heard verbal argument of the respondent/representative. In view of the above facts prove that the respondent has deliberately imported banned items in order to suppress the value and taxes, willfully and with mala fide intention and has attempted to defraud the government from its legitimate revenue. The charges of the show-cause notice stand established. The imported goods are accordingly confiscated in terms of Appendix C of IPO, 2010. A penalty of Rs.10,000 is also imposed under clauses 14 and 14A of section 156(I) of Customs Act, 1969 on the importer".

4.The applicants being dissatisfied with the said Order in the Originals preferred appeals before the Collector (Appeals) who vide a common Order dated 1-11-2011 allowed both the appeals and grantedthe benefit of the amending Notification i.e. S.R.O.794(I)/2011 dated 25-8-2011 and ordered that the said goods be allowed to be redeemed on payment of a fine equal to 20% of the value thereof. The respondents being aggrieved by the said order of the Collector (Appeals) preferred a further appeal before the Tribunal in terms of section 194A of the Act. The learned Tribunal vide the impugned order dated 13-12-2012 has set aside the Order of Collector (Appeals) against which the applicants have now filed the instant reference applications.

5.Mr. Muhammad Afzal Awan, Advocate appearing on behalf of the applicants, contended that the subject items could not have been confiscated out rightly and the applicants were entitled to the benefit of the amending notification which was issued during the pendency of the matter at the appellate stage, and hence the Collector (Appeals) had correctly allowed the benefit of the said amending notification as it was beneficial in nature. It was further contended by the learned counsel, that in terms of section 181 of the Act, no outright confiscation, without an option to pay fine in lieu of such confiscation of the goods, was permissible and hence the applicants were entitled for redemption of the goods on payment of fine in lieu thereof. Learned counsel further contended that the Tribunal has seriously erred in law by holding that the amending notification was only applicable to manufacturer and not to commercial importers. Learned counsel relied upon the case of Messrs Hashwani Hotels Limited v. Government of Pakistan and others reported in 2007 PTD 1473.

6.Conversely, Mr. Kashif Nazeer, learned counsel appearing on behalf of the respondents contended that since at the time of passing of the order of confiscation, the goods were not permissible to be released onpaymentofredemption fine in terms of S.R.O. 499(I)/2009dated13-6-2009, hence the order passed by the Tribunal is correct in law. It was further contended that retrospective benefit of the amending S.R.O. No.794(I)/2011 dated 25-8-2011 could not have been granted by the Collector (Appeals) as the notification was issued on 25-8-2011, and in absence of any specific date for its retrospective application, the same was to take effect from the date of its issuance.

7.We have heard both the learned counsel and have perused the record. By consent of all the matter is being finally disposed of at Katcha Peshi stage.

8.On perusal of the facts of the case and the law prevalent at the relevant time, it appears that at the time when the goods in question were imported, the same were hit by appendix 'C' of the IPO, and were not freely importable in old and used condition. Consequently, the same were liable to outright confiscation in terms of Serial No 2, clause (d) of S.R.O. 499(I)/2009 dated 13-6-2009 issued in exercise of the powers conferred by Section 181 of the Act, whereby it was notified that no option shall be given to pay fine in lieu of confiscation in respect of the goods or classes of goods as mentioned in clauses (a) to (g) of the said Notification, except as covered under the proviso to the said notification. It was further provided in the proviso that the quantum of fine in lieu of confiscation in respect of offences specified in column (2) of the table to the S.R.O. shall be at the rate specified in column 3 of that table and shall be over and above the customs duties and other taxes and penalties imposed under the relevant law. For convenience, the relevant provision of Serial No 2 clause 2(d) is reproduced hereunder:--

"(d) Old and used spare parts and accessories, if imported along with the second-hand plant and machinery used in manufacturing of goods".

9.It further appears that S.R.O. 499(I)/2009 dated 13-6-2009 was amended vide S.R.O. 794(I)/2011 and Serial No.2 clause(d) as above, was substituted in the following manner:--

"(d) Oldandusedsparepartsandaccessoriesforuseinsecond hand plant and machinery used in manufacturing of goods".

10.It is an admitted fact that when this S.R.O. 794(I)/2011 dated 25-8-2011 was issued, the matter was pending before the learned Collector (Appeals) who had allowed the benefit of the same to the applicants and had ordered that the goods which have been confiscated out rightly, shall be released to the applicants on payment of fine @ of 20% of the value as mentioned in the said S.R.O.

11.The precise controversy between the parties to our understanding, which remains to be decided is, as to whether the applicants are entitled for the benefit of the amending S.R.O. issued on 25-8-2011, and whether the same is applicable on the commercial importers or not. In so far as the first issue is concerned, it is now a settled proposition that the notification which confers a benefit or right to a person can be given retrospective effect, whereas the notification which disturbs or impairs a vested right of a person or creates a new liability cannot be applied retrospectively in absence of a legal sanction to that effect. There is a plethora of case-law on this issue and very recently in an identical situation, the Honorable Supreme Court in the case reported as 2012 SCMR 1698 (Collector of Customs, Lahore and others v. Mrs. Shahida Anwar) while dealing with the Import Policy Order has once again held that where a notification confers a right to a person, the same ought to have been given effect retrospectively. In this matter a vehicle under the gift scheme was imported and at the relevant time it was envisaged by the Import Policy Order, 2004-2005 that the vehicle should be of model not more than 2 years prior to the import. However, vide Import Policy Order, 2005-2006 the above period was increased to 3 years. The vehicle imported by the petitioner was detained by the department and a notice was issued to the effect that the vehicle is not covered by the 2 years period and in fact is a 3 year old model, therefore, why it should not be confiscated. After adjudication an Order-in-Original was passed confiscating the car which order was challenged by the Importer by filing a Constitutional Petition before the learned Lahore High Court which was allowed vide judgment dated 17-4-2009. The Lahore High Court by relying upon the judgments reported as Messrs Army Welfare Sugar Mills Ltd. and others v. Federation of Pakistan and others (1992 SCMR 1652) and Anoud Power Generation Limited and others v. Federation of Pakistan and others (PLD 2001 SC 340), held that as the subsequent Import Policy Order, 2005-2006 provided a period of 3 three years to avail the benefits of gift scheme and the vehicle of the respondent pertains to this period, therefore, the latter policy would have retrospective effect and the confiscation order passed by the adjudicating authority was not legally tenable. This order of the Lahore High Court was challenged by the department before the Honorable Supreme Court, and the Civil Petition for leave to appeal filed by the department was dismissed by the Honorable Supreme Court with the following observations:--

"We have heard the learned counsel for the petitioners and find that before any action was initiated by the petitioner against the respondent, a new Policy Order has come into force on 31-7-2005 in which the period for the import of a vehicle was increased from 2 years to 3 years. Obviously in the light of the law laid down in the judgments supra, such notification by all means can be given a beneficial interpretation and retrospective effect accordingly, which is exactly what has been done by the learned Judge in Chambers. Resultantly, we do not find any merit in this petition which is hereby dismissed and leave refused."

12.Therefore we are of the view that since the S.R.O. 794(I)/2011 dated 25-8-2011 is a beneficial notification whereby it allows redemption of confiscated goods on payment of fine, therefore, it can be given retrospective effect as the cases of the applicants were still pending at the appellate stage and as such the Collector (Appeals) had correctly allowed the benefit of the same to the applicants.

13.In so far as the second question is concerned, on perusal of S.R.O. 794(I)/2011 dated 25-8-2011; it appears that the same is applicable on old and used spare parts for use in second hand plant and machinery used in manufacturing of goods. The benefit is on parts which are used in machinery and which in turn is used in the manufacture of goods. It nowhere puts any restriction that it is only applicable if such parts are imported by manufacturers for their machinery exclusively. It is an admitted fact that machinery is a freely importable item, generally, and can be imported by a manufacturer as well as by a commercial importer.Therefore we are of the view that the same does not restricts its application on the imports made only by the manufacturers, and is also applicable on the imports made by the commercial importers. The words used in the amending notification are not restrictive to that extent i.e. imports by manufacturer only and would also apply to commercial importer. The only restriction is that such parts of the machinery are to be used in the manufacturing of good irrespective of the fact that they have been imported by a commercial Importer or an industrial importer.

14.In, view of the above discussion; question No. 1 is answered in the affirmative, in favour of the applicants and against the respondent and question No.2 is also answered in the affirmative, in favour of the applicants and against the respondent.

15.The instant reference applications are allowed and the impugned order passed by the Tribunal is set aside. The Registrar of this court is directed to send copy of this judgment under the seal of the Court to the Tribunal for information.

MH/A-7/SindhReference allowed.