LUCKY CEMENT LTD. KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2015 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 289 (2014)

Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----S. 10---Federal Ombudsman Institutional Reforms Act (XIV of 2013), S.11---Complaint---Manufacturing of Cement---Interim relief, grant of---Complainant had sought indulgence of the Ombudsman against a letter, issued by Deputy Collector (Exports); whereby the Private Manufacturing Bond Warehouse Licence, had been amended by deleting shredded tyre scrap (cut into pieces) from manufacturing bond licence---Contention was that shredded tyres were used as fuel; and it was not an input material for manufacturing of cement to be used as input material---Complainant being aggrieved by said letter filed complaint to the ombudsman, along with application for grant of interim relief by suspending the operation of impugned letter, whereby facility of manufacturing bond, was withdrawn---Documents available on record, prima facie, supported the plea of the complainant---Circumstances, explained by the complainant, reflected that, if the clearance of shredded tyres was withheld, the complainant would face irreparable loss---Interim injunction was granted in favour of the complaint by suspending the operation of impugned letter in circumstances.

Justice (R.) M. Nadir Khan, Advisor Dealing Officer.

M. Afzal Awan, Authorized Representative.

Nemo for Departmental Representative.

ORDER

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.--The complainant has sought indulgence of the Federal Tax Ombudsman against letter C. No. SI/Misc/01/Mfg-Bond/Exp-2-9-2014 issued by Deputy Collector (Exports) whereby the Private Manufacturing Bond warehouse License No. PW1 No.01/2014 MFG Bond/EXP (PMBO) has been amended by deleting shredded tyre scrap (cut in to pieces) from manufacturing bond license on the ground the shredded tyres are used as fuel and it is not an input material for manufacturing of cement to be used as input material under Chapter-XV of S.R.O. 450(I)/2001 dated 18-6-2001.

2.The complainant being aggrieved by the letter dated 2-9-2014 has filed complaint on the grounds that:--

(i)the license was issued after completion of all formalities on 1-4-2014 for one year,

(ii)the complainant started importing shredded tyre scrap (cut into pieces) being input goods,

(iii)the license was amended without notice or opportunity of hearing to the complainant,

(iv)the complainant will suffer irrepairable loss as 220 containers are in open sea and letters of credit of about 700 containers have already been established. The goods, if not released, will incur huge charges; and

(v)the complainant made two representations for restoration of license pending show-cause notice and issuance of appeable order but no response has been made by the Department.

3.Along with the complaint, an application under section 11 of the Federal Ombudsman Institutional Reforms Act, 2013 has been filed contending that the complainant has a prima facie case as the license has been amended without notice to the complainant due to which the complainant will face hardship. The complainant requested for affording opportunity of hearing.

4.The AR was heard on 11-9-2014. During hearing the AR, reiterating the averments of the complaint, pleaded that the manufacturing bond license issued to the complainant has been revised by the Deputy Collector and facility of manufacturing bond for shredded tyre scrap has been withdrawn unjustifiably on the ground that the same is used only to generate energy, whereas the complainant is using shredded tyre scrap as raw-material for manufacturing of cement. He submitted details of raw-material used for manufacturing of cement which include shredded tyres also. According to the AR withdrawal of facility of manufacturing bond for shredded tyres was without any notice to the complainant and opportunity of hearing was not afforded. Besides the order was passed by the Deputy Collector whereas, manufacturing bond license was issued by the Collector. The Deputy Collector, therefore, had no authority to amend the manufacturing bond license. The AR pleaded that amendment of manufacturing bond license will lead to irrepairable loss to the complainant as the clearance of consignments which have already arrived as well as the consignments which are to arrive will be withheld leading to hampering of manufacturing process and imposition of heavy demurrage charges and container rent on account of blockade of the aforesaid consignments at the Port.

5.The AR prayed for grant of interim relief by suspending the order dated 2-9-2014 passed by Deputy Collector withdrawing the facility of manufacturing bond for shredded tyres.

6.The AR on being confronted with the Findings/ Recommendations in Complaint No.343/KHI/CUS(163)847/2011, wherein the plea of the complainant was that shredded tyres are used as fuel. Furthermore, the quantity of shredded tyres being imported as per complaint is more than 900 containers whereas, composition of ingredients being used for manufacturing of cement show that tyres are used in small quantity which call for justification for import of huge quantity of shredded tyres.

7.The AR submitted that the above referred complaint related to the unit of the complainant situated at Gadoon whereas, the present complaint related to the manufacturing unit established at Karachi. Besides the complainant is ready to file undertaking that shredded tyre scarp being imported by the complainant will not be used as fuel and the complainant will file export orders to justify import of more than 900 containers of shredded tyres.

8.The complainant requested for time to file the undertaking and documentary evidence about justification for use of tyre being imported by the complainant. The request was allowed.

9.On 12-9-2014 the complainant submitted statement with details of export for months of July-September with copies of export GDs and copies of contract/Order for supply of cement. According to the complainant to meet the future supply order 877 containers of shredded tyre scarp will be consumed in manufacturing of cement.

10.The complainant has submitted undertaking stating that the shredded tyre scarp is being used as component or raw-material.

11.The submissions of the AR considered in the light of averments of the complaint and documents available on the record which prima facie support the plea of the complainant that tyre is used as a component/raw-material in manufacturing of cement and covered by the definition of input goods. The Customs letter dated 2-9-2014 about deletion of shredded tyre scrap from the manufacturing bond license does not indicate that the complainant was issued any notice or was afforded opportunity of hearing. The circumstance explained by the complainant reflect that if the clearance of shredded tyres is withheld, the complainant will face irrepairable loss.

12.In view of the foregoing facts and circumstances interim injunction is granted in favour of the complainant by suspending the operation of letter No.SIMisc/01/Mfg.Bond/Exp-2014 dated 2-9-2014 for 30 days. The Collector of Customs is directed to obtain expert advice of PCSIR and refer the matter to the FBR for resolution within this period.

HBT/121/FTOApplication granted.