PAKISTAN STATE OIL CO. LTD. VS COLLECTOR OF CUSTOMS, through Additional Collector of Customs, 2017 PTD-KARACHI-HIGH-COURT-SINDH 397 (2015)

Customs Act (IV of 1969)---

----S. 196---Reference to High Court---Scope---Factual controversy---Supreme Court in the present case had remanded the matter to Adjudicating Officer to decide factual controversy afresh---Decision made Adjudicating Officer in post remand proceedings was maintained upto Customs Appellate Tribunal---Validity---Supreme Court had remanded the matter to adjudicating authority precisely on the ground that the matter involved the resolution of factual controversy---Supreme Court in remand order had categorically held that insofar as question of law was concerned, the same already stood decided by the court against importer in earlier round of litigation---No substantial question of law had been referred for opinion of High Court by importer---Reference application which did not relate to actual controversy and related to factual aspect of the matter could not be examined by High Court while exercising reference jurisdiction under S. 196 of Customs Act, 1969---High Court declined to answer questions proposed by importer as the same already stood decided against importer in earlier roundoflitigation by Supreme Court---No factual controversycouldbe agitated or decided by High Court under S. 196 of Customs Act, 1969---Reference was dismissed in circumstances.

Collector of Customs Excise and Sales Tax v. Pakistan State Oil Company 2005 SCMR 1636 and Pakistan State Oil Company Ltd. v. Collector of Customs Excise and Sales Tax and others 2006 SCMR 425 ref.

Collector of Customs and another v. MessrsFatima Enterprises Ltd. 2012 SCMR 416; MessrsGold Trade Impex through Partner and another v. Appellate Tribunal of Customs, Excise and Sales Tax through Collector of Customs and 2 others 2012 PTD 377 and Collector of Customs through Additional Collector of Customs, Karachi v. Qasim International Container Terminal (Pvt.) Ltd. 2013 PTD 392 rel.

Farrukh A. Shaikh for Applicant.

G. Haider Shaikh for Respondents.

Date of hearing: 16th January, 2015.

JUDGMENT

MUHAMMAD JUNAID GHAFFAR, J.---Through this common judgment we will dispose of the aforesaid Special Custom Reference Applications bearing Nos.201 to 282 of 2011 (82 cases) which have been preferred under section 196 of the Customs Act, 1969 against a common order dated 20.12.2010 passed in Customs Appeals Nos.K-799 to 880 of 2010 by theCustoms Appellate Tribunal, Bench-II, Karachi, as theyinvolve the following common questions proposed on behalf of the applicant.

"1)Whether learned Appellate Tribunal has grossly erred in law by following an earlier judgment delivered by larger bench of same Tribunal vide Customs Appeal No. 111-K/2008 dated 6.7.2010 and failed to distinguish the same though based on different grounds, laws and facts?

2)Whether the learned Appellate Tribunal has failed to apply its judicial mind that clear directions of Hon'ble Apex Court in Civil Appeals Nos. 1965 to 1970 of 2007 dated 29.10.2009 were not followed in stricto senso by Adjudicating Officer includingTribunal's own directions to investigate and decide the question of limitation as prescribed under Section 32(1) & (2) of the Act, 1969 in its true prospective?

3)Whether the learned Appellate Tribunal was obliged to apply Sections 3, 5 and 6 of the Petroleum Products (Development Surcharge) Ordinance, 1961 and rules made in 1967 (SRO) 39(R) 1967 dated 29.3.67) besides sections 118 and 98 of Act, 1969 to uphold the levy of Petroleum Products (Development Surcharge) Ordinance, 1961 (PDL) in the present case?

4)Whether the learned Appellate Tribunal was legally obligedto exercise power under Section 194-Q(6&7) of the Act, 1969 when the Adjudicating Authority has failed to thoroughly investigate and determine the applicability and relevancy of date and amount of PDL Under Sections 32, 5(a) ibid besides Sections 11(3), 12, 12-A of CE Act, 1944."

2.Briefly, the facts as per the statement of case are that the applicant during the period of 1997 to 2000 had supplied High Speed Diesel Oil (HSD) to Pakistan Navy. from its Bonded Warehouse situated at Keamari, Karachi, by filing Export Shipping Bills, wherein no duty and taxes were paid by the applicant, though the same were charged and recovered from Pakistan Navy Subsequently, various Show Cause Notices were issued to the applicant which were adjudicated upon against the applicant and being aggrieved the applicant had preferred appeal(s) before the Customs Appellate Tribunal which were also dismissed. Thereafter the applicant had impugned the judgment of the Customs Appellate Tribunal before this Court and the Reference Applications filed on behalf of the applicant were also dismissed. The matter then went up to the Hon'ble Supreme Court and in respect of 6 cases, the Hon'ble Supreme Court in Civil Appeals Nos. 1965 to 1970 of 2007 vide order dated 29.10.2009, remanded the matter to the Adjudicating Authority as 76 other matters in respect of the same controversy already stood remanded to the Customs Appellate Tribunal by the High Court of Sindh whereafter the Customs Appellate Tribunal in respect of Customs AppealsNos.K-468 to K-530/2002, K-73 to K-75/2004 and K-34toK-356/2006 had already remanded the matter to the Adjudicating Authority. On remand, the Adjudicating Authority has once againpassed Order in Original(s) dated 19.3.2010 and others against the applicant which were further assailed before the Collector of Customs (Appeals), Karachi, who vide a common order bearing Nos. 3844 to 3965 of 2010 dated 18.6.2010, while upholding the order of Adjudicating Authority had dismissed all the appeals. The order of CollectorofCustoms(Appeals)wasfurtherchallengedbytheapplicant under Section 194-A of the Customs Act, 1969 before the Customs Appellate Tribunal who by a common order dated 20.12.2010 has also dismissed the appeals(s) which has now been impugned through instant. Reference Applications by proposing the aforesaid Questions of Law.

3.Mr. Farrukh A Shaikh, learned Counsel for the applicant has contended that the Hon'ble Supreme Court while remanding the matter vide order dated 29.10.2009 in CPLA Nos. 1965 to 1970 of 2007 had directed the Adjudicating Authority to decide the matter(s) within a period of 30 days, whereas, such directions have not been complied with by the Adjudicating Authority; hence, the Order-in-Original(s) passed in the instant matter cannot be sustained in law. Learned Counsel further submits that the Customs Appellate Tribunal has fallen in grave error while deciding the appeals of the applicant by placing reliance on the earlier judgment in the case of applicant by a larger bench of the Customs Appellate Tribunal, which according to learned Counsel, pertained to an altogether a different controversy. Learned Counsel has further contended that the Show Cause Notice(s) in majority of the cases were time barred, hence no further proceedings could be sustained under law and the entire process of recovery of the alleged amount of duty and taxes is illegal and without any lawful authority. It has been prayed that impugned order be set aside and the questions as framed hereinabove may be answered in favour of the applicant.

4.Conversely Mr. Ghulam Haider Shaikh learned Counsel appearing on behalf of the respondent department submits that insofar as the merit of the case is concerned, the legal controversy stands decided against the applicant by the Honourable Supreme Court in an earlier round of litigation in the case reported as Collector of Customs Excise and Sales Tax v. Pakistan State Oil Company (2015 SCMR 1636) against which the applicant had preferred a Review Petition before the Hon'ble Supreme Court which was also dismissed in the case reported as Pakistan State Oil Company Ltd. v. Collector of Customs Excise and Sales Tax and others (2006 SCMR 425); hence the contention of the learned Counsel of the applicant is without any substance whereas, the Hon'ble Supreme Court vide order dated 29.10.2009 had remanded the matter to examine a very limited controversy to the Adjudicating Authority, which nowalso stands decided against the applicant, therefore, all the aforesaid proposed questions are misconceived, and the above Reference Applications are liable to be dismissed.

5.We have heard both, the learned Counsel and have also perused the record and the judgment/orders passed in the earlier round of proceedings in the case of present applicant. Since a very short controversy is involved in the instant matter, by consent of both the learned Counsel, the aforesaid Reference Applications are being decided finally at Katcha peshi stage.

6.It appears that the applicant which is an Oil producing and marketing Company had supplied High Speed Diesel Oil (HSD) to the ships of Pakistan Navy from its Bonded Warehouse at Keamari, Karachi, and had not deposited any duty and taxes on such supply by claiming exemption under Section 106 of the Customs Act, 1969. It has come on record, that though, the applicant was not depositing any duty and taxes with the Government treasury, however, the applicant was recovering the same from Pakistan Navy and was withholding it in its own account. It has also been noted from perusal of the record that only after initiation of recovery proceedings and issuance of Show Cause Notices, the applicant has started to deposit the amount of duty and taxes withheld in respect of the supplies of HSD Oil made to Pakistan Navy, and is no more being disputed by the applicant. Such fact has not been controverted by the learned Counsel for the applicant. It is also an admitted position that in the first round of litigation when Show-Cause Notices were issued to the applicant, the matter went up to the Hon'ble Supreme Court after a learned Division Bench of this Court vide order dated 03.08.2004 in Special Customs Reference Application No. 210 of 2001 and others had decided the matter in favour of the applicant. The Hon'ble Supreme Court in the case of Collector of Customs Excise and Sales Tax supra at paras 11 and 12 of the said judgment had decided the controversy in respect of the subject matter in the following terms:--

"11. Perusal of Section 196 of the Act reveals that High Court can exercise its jurisdiction only in respect of questions of law arising out of order under Section 194-B of the Act. It is significant to note that before the Customs hierarchy plea of limitation was not raised. It being so, the High Court was not competent to consider said plea, as it was neither raised before Collector Customs, nor before the Tribunal. There is no discussion on the point of limitation in the orders passed by the Collector Customs and the Tribunal. Question of limitation is a mixed question of law and fact and unless it was raised before the forum below, it could not straightway be agitated before High Court. It can be concluded that such question never arose from the order passed by the Tribunal. Factual controversy is sorted out up to the level of the Tribunal. Remedy under section 196 is restricted to legal points only, which was not available to the respondent-Company before High Court.

12. It was conclusively proved that section 106 was not available to the company, which pocketed the amount of duty/taxes while selling POL products to Pakistan Navy. Besides, it is an admitted position that the respondent-Company has already started making payment of duty/taxes with effect from 1 September, 2000 on the supplies of POL products (HSGO) to Pakistan Navy, which furnishes sufficient basis to hold that the demand of Customs Authorities was correct and according to law. It has also stands proved that the respondent-Company since long withheld Government revenue without any justification. The record also discloses that from September, 2000toMay,2001theCustomsAuthoritieshavecollectedan amount of 85 million rupees as duty/taxes from the respondent-Company on the supplies of POL products to Pakistan Navy."

7.The applicant being dissatisfied with the judgment of Hon'ble Supreme Court in the aforesaid matter had preferred Review Petition(s) bearing Nos. 200 to 329 of 2005 and the sate was also dismissed by the Hon'ble Supreme Court in the case of Pakistan State Oil Company supra in the following terms:--

"10. The High Court having not gone into the real question regarding the applicability of Section 106 of the Customs Act, 1969, to the supplies of oil products made by the petitioner-Company to the Pakistan Navy certainly committed a jurisdictional, error in the judgment and this Court having considered it an essential proposition of law, decided the same in the interest of complete justice, therefore, the contention of the learned counsel that the case was required to be remanded to the High Court for decision of the remaining questions raised in the appeals, which were left undecided by the High Court has no substance. The proceeding before the High Court under section 196 of the Customs Act, 1969 arising out of an order passed by the Customs Appellate Tribunal under section 194-B of the said Act can be entertained only on a question of law, therefore, this Court deemed it proper to decide the substantial question of law relating to the claim of exemption on the payment of duty/taxes on the supplies of oil products to the Pakistan Navy under section 106 of the Customs Act, 1969. Under section 112 of Sea Customs Act, 1878 free shipments from bound were allowed on store Shipped on a vessel proceeding to a foreign port provided the vessel was engaged in foreign trade and section 106 of the Customs Act, 1969, subject to the provisions of section 98 of the said Act envisages that any warehoused goods and stores may be exported without payment of import duty for use on board any conveyance proceeding to a foreign territory. Thus, the question that which Pakistan Navy ship when proceeded on foreign destination is purely a question of fact and consequently, the supplies of oil products for consumption of Pakistan Navy ships would not be ipso facto exempted from Customs duty/taxes under Section 106 of the Customs Act, 1969.

10. Learned Counsel for the petitioner instead of pointing out any error apparent on the face of record in the judgment under review has made an attempt to reopen the case on the points already taken note of and decided in the judgment. It may be observed that substance of arguments raised by the learned Counsel in support of these review petitions has been dealt with in the main petitions on the principle of law and the petitioner in the garb of review petitions has made an attempt to re-argue the matter on merits. This is settled principle that review does not lie merely on the ground that there was an error in the judgment or that another view of the matter was also possible. This Court although is not bound by its own judgment and may subsequently, review the law declared by it, if circumstances so demand but power of review is exercised very seldom and only in the exceptional cases in which some important aspect of the matter escaped the notice of Court or was not considered and such an error was apparent in the judgment. The conclusion drawn and judgment rendered after due consideration of the material points on the basis of foundation laid by the parties, cannot be re-considered to alter the judgment in review jurisdiction."

8.On perusal of the above judgment of the Hon'ble Supreme Court, it appears that insofar as the merit of the case is concerned, there is nothing left to be decided by this Court and in fact the learned Counsel for the applicant has also frankly conceded to this effect that the matter already stands decided by the Hon'ble Supreme Court, wherein it has been categorically held that the exemption claimed by the applicant under Section 106 of the Customs Act, 1969 was not available to the applicant. However, the learned Counsel for the applicant has argued that in this matter the Hon'ble Supreme Court in the subsequent round of litigation, despite of the fact that the matter already stood decided up to the levelof the Hon'ble Supreme Court, had remanded the matter to the Adjudicating Authority to examine as to whether the Show Cause Notice(s) issued to the applicant were time barred or not. On perusal of the order of remand passed by the Hon'ble Supreme Court in Civil Petitions for Leave to Appeals Nos. 1965 to 1970 of 2007 dated 29.10.2009, it appears that the contention of the learned Counsel for the applicant in this regard is completely misconceived and not tenable. It would be advantageous to refer to the findings of the Hon'ble Supreme Court in its order dated 29.10.2009 as referred to hereinabove whereby the matter was remanded to the Adjudicating Authority which reads as follows:--

"7. On Court query as to on the basis of which document the learned High Court of Sindh in paragraphs 12 of the impugned judgment, gave a finding that the appellant had been charging the value of petroleum products inclusive of custom duty from Pakistan Navy and making a willful declaration that the supplies were duty free, learned counsel for the respondent-Customs Department submitted that the Ministry of Petroleum had fixed two oil prices, one was inclusive of the taxes and the other was without taxes and the appellant had been charging Pakistan Navy the latter price. We would, not like to comment on the veracity or otherwise of the afore-referred reply as it relates to a factual aspect and only tribunal of plenary jurisdiction seized of the issue can decide the matter in the light of the record made available before it. So far as the question of law is concerned, the same stands decided by this Court in the two judgments to which reference has been made above but the issue mooted before this Court in these appeals cannot be conclusively decided without resolution of the factual controversy and in this context, the request of appellant's learned counsel to remand the cases to the Adjudicating Officer is not without substance particularly when between the same parties and qua the same period, more than 70 matters were remanded by the Customs, Excise and Sales Tax Appellate Tribunal, Karachi vide the order dated 17.1.2008 and those are still pending. The order of remand, it seems attained finality as it was never challenged by the respondent-department.

8. In the afore-referred circumstances, we are persuaded to allow these appeals, the impugned judgment is set aside the appellant's appeal shall bedeemed to be pending before the Adjudicating Officer who had decided the matter in the earlier round and shall be decided along with the other matters pending before it, within a period of 30 days of parties appearance before the said Adjudicating Officer/Collector Customs (Preventive). Both the parties are directed to appear before the said officer on 3.11.2009. It is however, made clear that the Bank guarantees got encashed by the respondent department shall not be refunded till the final disposal of the cases pending before the Tribunal to which reference has been made in the preceding paragraph."

9.On a meticulous examination of the above findings, it appears that the Hon'ble Supreme Court had remanded the matter to the Adjudicating Authority precisely on the ground that the matter involved resolution of factual controversy. whereas, the Hon'ble Supreme Court in the aforesaid order had categorically held that insofar as the question of law is concerned the same already stands decided against the applicant by the Hon'ble Supreme Court in the earlier round of litigation in the judgments referred to herein above. Therefore, the contention of the learned Counsel for the applicant that the matter was remanded to examine the issue of limitation does to not appear to be correct nor is borne out from a bare reading of the aforesaid order of the Hon'ble Supreme Court. It is further observed that after remand, the Adjudicating Authority has decided the controversy on law as well as on facts against the applicant and the appeals preferred by the applicant before the Collector of Customs (Appeals) as well as the Customs Appellate Tribunal, have been dismissed, therefore, this court under its reference jurisdiction in terms of Section 196 of the Customs Act, 1969 is even otherwise precluded from examining any factual aspects of the matter unless, such finding on facts is perverse or contrary material available on record. Therefore, the questions preferred on behalf of the applicant do not appear to be questions of law arising out of the order of the Customs Appellate Tribunal, whereas, the legal controversy relating to taxability and liability of the applicant (PSO) to withhold and pay tax on supplies of HSD Oil to the ships of Pakistan Navy, as agitated and raised on behalf of the applicant already stands decided against the applicant and the Hon'ble Supreme Court in its order of remand dated 29.10.2009 had directed the Adjudicating Authority to examine and decide the factual aspect of the matter to the extent to examine as to whether the supplies made by the applicant (PSO) included the amount of duty and taxes or not has, been decided against the applicant by all the forums below, whereas the learned Counsel for the applicant has not been able to dislodgesuchconcurrentfindingoffactnorproducedorreferredtoanymaterialwhichcouldsupportthefactualassertionsasreferredto hereinabove. We have also noted that in two rounds of litigation up to the Hon'ble Supreme Court, the applicant has never agitated such factual aspect of the matter and has now attempted to raise altogether a fresh ground relating to factual aspect of the matter, which amounts to abuse of the process of law, particularly when the applicant had already lost the case on merits up to the Hon'ble Supreme Court of Pakistan.

10.In view of hereinabove facts and circumstances of the case, we are of the considered opinion that no substantial questions of law have been referred for the opinion of this Court by the applicant in the aforesaid Reference Applications, which do not relate to the actual controversy and relates to factual aspect of the matter which cannot be examined by this Court while exercising reference jurisdiction under Section 196 of the Customs Act, 1969. Reference in this regard can be made to the cases reported as Collector of Customs and another v. MessrsFatima Enterprises Ltd., (2012 SCMR 416), MessrsGold Trade Impex through Partner and another v. Appellate Tribunal of Customs, Excise and Sales Tax through Collector of Customs and 2 others (2012 PTD 377) and Collector of Customs through Additional Collector of Customs, Karachi v. Qasim International Container Terminal (Pvt.) Ltd., (2013 PTD 392).

11.Accordingly we are not persuaded to answer the questions proposed by the applicant as they already stand decided against the applicant in the earlier round of litigation by the Hon'ble Supreme Court, whereas no factual controversy can be agitated or decided by this Court under section 196 of the Customs Act, 1969. Consequently all the aforesaid Reference Applications are dismissed in limine. The Registrar of this Court is directed to send a copy of this judgment under the seal of this Court to the Customs Appellate Tribunal in terms of section 196(5) of the Customs Act, 1969.

MH/P-5/SindhReference dismissed.