LUCKY CEMENT LIMITED, PESHAWAR VS The SUPERINTENDENT CUSTOMS REBATE, PESHAWAR, 2019 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1090 (2018)

Export Policy Order, 2005---

----S. 8(1)(a)---SRO No. 450(I)/2001, dated 18-6-2001---SRO No. 931(I)/2007, dated 11-9-2007---SRO No. 613(I)/2007, dated 16.6.2007---Export of cement to Afghanistan---Claim for repayment of customs duty---Rejection of claim being barred by time---Scrutiny of the duty drawback claims revealed that, all the claims were filed after expiry of limitation period of 210 days as provided under SRO No. 450(I)/2001, dated 18-6-2001 and SRO No. 931(I)/2007,dated11-9-2007---Superintendent of Customs (Rebate), vide his order-in-original had rejected the payment of claims of the appellant for violation of provisions of said SROs---Collector of Customs (Appeals), Collector of Customs (Appeals) upheld the order-in-original---Validity---Cases of export to Afghanistan against claims of rebate were under correspondence with the Federal Board of Revenue and Ministry of Commerce---Ministry of Commerce had devised a way out under which such claims could be considered by the Department pending the receipt of verification from Afghan Customs Department---Officer concerned sanctioning rebate claims, was competent to condone the delay in filing of claims, provided that the exporter had sufficient justification in his favour that the delay was beyond his control---Matter in question being under correspondence and was yet to be resolved the delay occurred in a way, was beyond the control of appellant---Sanctioning authority should have condoned the delay at the time of sanctioning of rebate or according to the procedure devised by the Ministry of Commerce---Contention of Departmental Representative that claims of rebate were not admissible being filed beyond the stipulated period of 210 days, did not hold the reasons---Department had not taken into consideration Ministry of Commerce's instructions issued vide OM No.16(1)/2005-E.I. dated 17-8-2007 as communicated by Federal Board of Revenue---Tribunal observed that claims of rebate filed by the appellant should have been considered in the light of those instructions, and action should have been taken if they had failed to produce the verified documents from the respective quarters---Delay was condoned with the directions to the department to sanction the rebate claims, filed by the appellant.

Danish Ali Qazi for Appellant.

Mussa Khan, Superintendent/D.R. for Respondents.

Date of hearing: 2nd July, 2018.

JUDGMENT

SYED SARDAR HUSSAIN SHAH, MEMBER (JUDICIAL).---This appeal has been filed by Messrs Lucky Cement Limited, Pezu, District Lakki Marwat (hereinafter called as the appellant) against the Order-in-Appeal No.89 of 2017, dated 15.02.2017, passed by the Collector of Customs (Appeals), Islamabad, Camp Office, Custom House, Jamrud Road, Peshawar, whereby upholding the Order-in-Original dated 03.06.2016 passed by Superintendent customs Rebate and dismissed the appeal of the appellant.

2.Briefly stated facts of the case are that Messrs Lucky Cement Company Pezu, District Lakki Marwat filed 460 numbers of repayment claims of customs duty on account of export of Cement to Afghanistan via land route Torkham and C. S. Ghulam Khan. Each case falls within the competency of Superintendent (Rebate Cell) as per detailed in Annex "A". During the scrutiny of the duty drawback claims, it has been observed that all such claims were filed after expiry of limitation period of 210 days as provided under SRO 450(I)/2001, dated 18.06.2001 read with SRO 931(I)/2007, dated 11.09.2007.

3.After completion of the requisite formalities, the matter was placed before the Superintendent of Customs (Rebate Cell), Model Customs Collectorate, Customs House, Peshawar, and a Show-Cause notice was issued to the appellants (then respondents) vide Customs office C.No.Cus/scn/Lucy/01/2015/3100, dated 19.04.2016

4.The Superintendent of Customs (Rebate) vide his Order-in-Original No.03 of 2016, dated 08.06.2016, rejected the repayment of 460 claims of the appellant for violation of provisions under Chapter VII of SRO 450(I)/2001, dated 18.06.2001 read with Schedule XIX of SRO 787(I)/2005, dated 06.08.2005 and SRO 931(I)/2007, dated 11.09.2007.

5.Being aggrieved of the above order, the appellant filed an appeal before the Collector of Customs (Appeals), Islamabad, Camp Office, Customs House, Jamrud Road, Peshawar, who vide Order-in-Appeal No.89, dated 15.02.2017 upheld the order dated 08.06.2016 of the Superintendent of Customs (Rebate), MCC, Custom House, Peshawar and dismissed the appeal. The appellant filed appeal in this Tribunal on various objections.

6.I heard Mr. Danish Ali Qazi, Advocate for the appellant and Mr. Muhammad Zahid, Superintendent/DR, Customs on behalf of the respondents and gone through the record of the case with their-able assistance.

7.In the show-cause notice, it is alleged that 460 numbers of repayment claims of custom duty on account of export of Cement had been filed beyond the period of 210 days in violation of S.R.O. 450(I)/2001, dated 18.08.2001 read with SRO 787(I)/2005, dated 06.08.2005 and SRO 840(I)/2006, dated 17.08.2006. In Order-in-Original, claim of the appellant was rejected on two grounds i.e. the rebate claims filed after an expiry of the limitation period of 210 days as well as the duty drawback from 17.08.2006 to 11.09.2007 was not available to the appellant on exportation of cement. The time frame shown in the Order-in-Appeal is wrong as the rebate on the exportation of cement was not allowed from 17.08.2006 to 11.09.2007 as evident from SRO.613(I)/2007, dated 16.06.2007, which is reproduced as under:-

S.R.O. 613(I)/2007.---In exercise of the powers conferred by clause (c) of section 21 of the Customs Act, 1969 (IV of 1969), and in supersession of its Notification No. S.R.O. 840(I)/2006, dated the 17th August, 2006, the Central Board of Revenue is pleased to authorize repayment of customs-duties to the extent specified in column (5) of the Schedules below, paid on the importation of the raw materials specified in column (1) of the said Schedules, used in the production or manufacture of the goods specified in column (2) of those Schedules and exported during the period specified in column (4) thereof, subject to the following conditions, namely:--

(i) the manufactured goods are exported out of Pakistan and an application for repayment of customs-duties is presented to the proper officer of Customs within two hundred and ten days of such exportation or within one hundred and eighty days from the date of realization of foreign exchange as shown on Bank Credit Advice issued in accordance with the current directive of the State Bank of Pakistan; and

(ii) the exporter makes a declaration on the goods declaration filed under section 131 of the Customs Act, 1969 (IV of 1969) and on other export documents for his claim for repayment of the customs-duties paid on the imported raw materials used in the production or manufacture of the goods being exported.

SCHEDULE XIX

The above stated SRO has clearly specified that the rebate on the same is available w.e.f. 10.06.2007 and onwards.

8.Counsel for the appellant stated that as per SRO.613(I)/2007, dated 16.06.2007, the appellant has no right to claim the rebate before the date mentioned in the above SRO, while w.e.f. 10.06.2007, the rebate claim is available to the appellant. The delayed occurred in filing of the rebate claims counsel for the appellant argued that the Collector of Customs, Peshawar vide his letter No. C.No./Export-Misc/3/02VI/Pt/ 9066, dated 03.09.2005 suggested to the Federal Board of Revenue, Islamabad as under:--

(i) With regard to the present arrangement of presenting Afghan Customs Document. It is submitted that the Aghan Customs are not interested to provide an extra copy of Afghan Customs Document (ACD) to the Pakistani exporters. Moreover, the Afghan importers do not present all the consignments to Afghan Customs for payment of leviable duty/taxes. Go it is proposed that bilateral arrangements may be made between the two Governments producing the furnishing a copy of ACD by Afghan Customs to Pakistan Customs for rebatable goods at it will also benefit the Afghan government as their duty/taxes collection will be increased.

(ii) The third option is that the verification by Embassy of Pakistan in Kabul or Consulates located at Jalalabad/Kandhar may be restored may be restored and the exporters may be given an option either to produce verification from Pakistani. Consulate/Embassy in Afghanistan or Afghan Customs Document (ACD) showing payment of leviable duty/taxes on the said goods.

Another letter was addressed by the Collector of Customs to the Federal Board of Revenue, Islamabad stating therein:-

(a)That in a number of cases relating to different exporters where there is one importer in Afghanistan only one certificate of receipt of goods is issued by the Afghan Customs.

(b)That the Afghan Customs documents are mostly in Persian language and are not verifiable. In some cases the Afghan Customs documents do not even contain the vehicle number.

(c)That the Afghan Customs are not interested to provide an extra copy of Afghan. Customs documents to the Pakistani exporters for the reasons mentioned in Para above.

The prevalent system of verification has created problems not only for the manufacturer-cum-exporters and other business community but also effected the performance of the Collectorate in timely disposal of rebate claims. This Collectorate however accepts the photo copies in the cases where exporters from Pakistan are different but importer in Afghanistan is one and the same. In such situation the original copy is kept in one file and the photo copies are placed in rest of the files.

Board is requested to kindly take up the matter at the appropriate level making suitable amendments in the present Export Policy Order including the provisions that the attested photo copy b y the appropriate officer after perusal of the original import clearance document may be accepted or any other suitable amendment which the Board may deem fit for facilitation of exporter may be made. Sarhad Chamber of Commerce and Industry, Peshawar vide their letter C.No.294/D/ SC/Customs, dated 25.11.2005 have been made a similar request. Otherwise the rebate 3 cases would be stuck up which may result in decline of exports to Afghanistan.

9.Counsel for the appellant referred another Office Memorandum of even number dated 19.07.2007 of the Secretary (Export Policy), Federal Board of Revenue, Islamabad to the Section Officer, Ministry of Commerce, Government of Pakistan, Islamabad which is reproduced as under:--

The undersigned is directed to refer to Ministry of Commencer's OM No. 16(1)2005-E-I, dated 03/07/07 on the above subject and to say that in order to resolve the issue pertaining to the disposal of pending duty drawback refund claims on the lines suggested by the Ministry, the Board has the following to propose:-

a) Claims of exporters from corporate sector may be disposed off against corporate guarantees binding them to submit appropriate verification of the requisite clearance documents from Kabul Customs Headquarters through Pakistan Mission at Kabul within sixty days of furnishing such guarantee. Considering the voluminous documentation involved for clearances over the past two years, verification/certification of such cases can be provided on a statement containing necessary particulars of the consignments. The format of such statement may be developed by the Collectorate in consultation with exporters, if necessary; and

b) In the case of exporters from non-corporate sector, the corporate guarantee may be substituted by an undertaking and a post-dated cheque to the same effect.

10.Counsel for the appellant referred another Office Memorandum of even number dated 17.08.2007, which was issued by the Ministry of Commerce, Government of Pakistan, Islamabad to the Secretary (Export Policy), Federal Board of Revenue, Islamabad in respect of the said O.M. dated 19.07.2007, wherein he clearly stated that:-

The undersigned is directed to refer to FBR's OM No. 3(59)/ EP/96 (Main) dated 19-07-2007 on the above subject and to say that Ministry of Commerce is of the view that verification responsibility should rest with Government Departments and not with exporters. FBR is accordingly requested to advise its field Collectorates to prepare exporter-wise list of Afghan Import Clearance Documents and furnish the same along with photocopies of these documents to Commercial Councilor, Kabul for verification from Kabul Custom Headquarters. During the period verification process is on CBR may advise field Collectorates to give option in export sector exporters to claim rebate/refund against post dated cheques. Exporters not availing the above option may be given refunds/rebates after Afghan Import Clearance Documents are verified by Afghan Customs Headquarters, Kabul. Ministry of Commerce is advising the Commercial Counselor Kabul to expedite verification of Afghan Import Clearance Documents as and when received from field Collectorates of CBR.

Counsel for the appellant argued that, the arrangement of ACCD within time, was beyond the control of the appellant as is evident from the Collector of Customs, Peshawar letters dated 03.09.2005 and dated 14.09.2005 as well as FBR O.M. dated 19.07.2007 and Ministry of Commerce OM dated 17.08.2007, and the delay in filing of rebate claim is due to non receipt of rebate files.

11.Counsel for the appellant further argued that the appellant has been discriminated as per minutes of the meeting dated 08.04.2008, Model Customs Collectorate of Exports, Custom House, Karachi, has decided that the clearing agents shall submit request for summary adjudication regarding all time barred claims at the time of filing rebate claims. Otherwise such time barred claims shall be processed on merit after deduction of 5% penalty in case the delay is more than 15 days of the expiry of due date of filing.

12.On the other hand, Departmental Representative of the respondent Mr. Muhammad Zahid, Superintendent, Customs argued that the case of appellant (Lakki Cement) is not a claim of single rebate but consist of 460 rebate claims and the appellant has got no NOC from the competent authority. The plea of the appellant is therefore baseless as they themselves ignored the said claims for years.

13.In reply to the arguments of the Departmental Representative, Counsel for the appellant argued that we have already filed applications to the Deputy Collector of Customs (Rebate), MCC, Customs House, Peshawar which is available on Page No.88 of the file for "Rebate application amounting to Rs.41,45,068/- relating to 875 Shipping Bills Export Consignments along with Condonation of Limitation if any" and similar letters dated 01.11.2011, 26.05.2014 and 18.09.2016 (which are available on Pages Nos.113, 114 and 116 of the file).

14.I have gone through the record of the case and considered the written as well as verbal arguments put-forward by both the parties. It transpires that cement was exported by the appellant/Messrs Lucky Cement Company Limited via land route to Afghanistan by filing GDs. Claims for rebate/duty drawback were filed, but after the expiry of stipulated period of 210 days, prescribed under Notification No.SRO.415(I)/2001, dated 18.08.2001, 787(I)/2005, dated 06.08.2005 and 840(I)/2006, dated 17.08.2006. The Show-Cause Notice only refers to the delay in filing of the rebate claims of 210 days and does not refer to any other reason due to which the clams for rebate were not maintainable. The rebate claims were rejected because these were too old and because the appellant had failed to produce copy of the ACCD. The claims were decided without giving them an opportunity of hearing and without representing by their nominee, as is evident from the Order-in-Original.

15.The record shows that initially the export of rebateable goods to Afghanistan and its subsequent verification was to be made through commercial Counselor of Pakistan at Kabul, Jalalabad but by virtue of change in Section 8(I)(a) of the Export Policy Order, 2005, issued vide SRO.573(I)/2005, it was made mandatory that export verification shall be made on the basis of copy of import clearance documents by Afghan Customs authorities across the border. This change in the policy made this situation objectionable to the exporters and the matter was taken up by the Sarhad Chamber of Commerce Industries (now Khyber Pakhtunkhwa chamber of Commerce Industries) and Collectorate of Customs, Peshawar, who took it up with the FBR and the FBR referred the issue vide its letter C.No.3(59)/EP/96(Main), dated 19.07.2007, to the Ministry of Commerce. The Ministry of Commerce vide its letter No.16(I)/2005-E.1, dated 17.08.2007, intimated as under:-

The undersigned is directed to refer to FBR's OM No. 3(59)/EP/96 (Main) dated 19-07-2007 on the above subject and to say that Ministry of Commerce is of the view that verification responsibility should rest with Government Departments and not with exporters. FBR is accordingly requested to advise its field Collectorates to prepare exporter-wise list of Afghan Import Clearance Documents and furnish the same along with photocopies of these documents to Commercial Councilor, Kabul for verification from Kabul Custom Headquarters. During the period verification process is on CBR may advise field Collectorates to give option in export sector exporters to claim rebate/refund against post dated cheques. Exporters not availing the above option may be given refunds/rebates after Afghan Import Clearance Documents are verified by Afghan Customs Headquarters, Kabul. Ministry of Commerce is advising the Commercial Counselor Kabul to expedite verification of Afghan Import Clearance Documents as and when received from field Collectorates of CBR.

16.The FBR vide its letter C.No.3(59)/EP/96, dated 22.08.2007, issued instructions on the basis of Ministry of Commerce aforesaid letter for necessary action to its field formation. The FBR subsequent to the above instructions also issued direction vide its letter of even number dated 10.10.2007 to get copies of the Afghan Customs Clearance Documents (ACCD) submitted by the exporters/claimants verified from the Customs Headquarters at Kabul in the manner as outlined in Ministry of Commerce's letter No.16(I)/2005-E-I, dated 17.08.2007 for further processing of the claims of rebate.

17.All these indicate that the cases of export to Afghanistan against claims of rebate were under correspondence with the FBR and Ministry of Commerce. The Ministry devised a way out under which such claims could be considered by the department pending the receipt of verification from the Afghan Customs Department.

18.From perusal of sub-para (iii) of para 47 of the Customs General Orders No. 12 of 2002, it is evident that the officer concerned sanctioning rebate claim is competent to condone the delay in filing of rebate claims provided that the exporter has sufficient justification in his favour that the delay was beyond his control. Apparently, as transpires from the correspondence, referred to in the preceding paras, it appears that the matter was under correspondence and was yet to be resolved and thus, the delay occurred in a way, which was beyond the control of the appellant. Keeping this in view, the sanctioning authority should have condoned the delay at the time of sanctioning of rebate or according to the procedure devised by the Ministry of Commerce vide its OM No.16(I)/2005-E.1, dated 17.08.2007. The contention of the D.R. that the claims of rebate were not admissible being filed beyond the stipulated period of 210 days and that the respondents had no substantial reason in their favour, apparently does not hold the reasons. He referred to a judgment of Hon'ble Peshawar High Court, Peshawar in Customs Reference No.83 of 2010, dated 23.12.2010 (titled Collector of Customs, Peshawar v. Messrs Bilour Enterprises), wherein the Hon'ble Peshawar High Court, Peshawar has rejected the plea of the party in a similar case. Here a reference is made to para-8 of the orders, which states as under:--

"8. Now we are to see whether the respondents have succeeded in justifying that delay in filing the duty drawback claim was beyond their control. In their reply to the show-cause notice, the respondents averred that the export documents that go with the consignment to the Afghan Gumruk Paper were sent late by the concerned party especially ACCD (Afghan Gumruk Papers) without which they were unable to file their duty drawback claims. This stance was repeated throughout, but it somehow or the other, did not find favour in any for a functioning under the learned appellate Tribunal. The respondents thus preferred an appeal before the learned appellate Tribunal, but the stance they took before the learned Appellate Tribunal was different altogether. Here they sought refuge in the law and order situation in the area and in kidnapping of the person, concerned in the Organization who was carrying the relevant documents. This stance quite obviously was different from the one taken earlier. Nothing in black and white was brought on the record to substantiate it. If it was due to the law and order situation or due to kidnapping of the person concerned, it should have been averred and asserted earlier. The justification so furnished by the respondents appears to be an offshoot of half baked thought which cannot be held to be tenable in the matrix of the case, especially when it is in conflict with the one taken in the fora below. The finding of the Tribunal, in this backdrop appears to have been based on no evidence, therefore, it cannot be maintained in view of the judgments rendered in the cases of Oriental Investment Co. Ltd. v. Commissioner of Income Tax, Bombay (PLD 1958 Supreme Court (Ind) 151), Shree Meenakshi Mills Ltd., Madurai v. Commissioner of Income Tax, Madras (PLD 1957 Supreme Court (Ind)) 188) and Messrs Pakistan International Public School Abbottabad v. Commissioner Wealth Tax (2006 PTD 545)."

19.Judgment of the Hon'ble Peshawar High Court, Peshawar, it transpire that the case under appeal is different than the one to which the learned D.R. has referred to. In Customs Reference No.83 of 2010, dated 23.12.2010, the Hon'ble Peshawar High Court, Peshawar has rejected the claim of the claimant on the grounds that there is difference in please of the rebate claim at different stages. First one was that ACCD was not sent within the time and the second was that because of law and order situation in the area and kidnapping of a person concerned in the organization, who was carrying the relevant documents, rebate claims could not be filed in time. In the instant appeal, as is evident from the various correspondence made, in between Superintendent Customs (Rebate Cell) Custom House, Peshawar, and the respondents only one point of view has been taken that their importer in Afghanistan was unable to provide the original copy of the ACCD along with the export documents and that on their request Ministry of Commerce, Government of Pakistan has modified the procedure vide its OM.No.16(I)/2005-E.1, dated 17.08.2007.

20.Keeping in view the position, as is evident from the record and contention of the learned counsel for the respondents and the D.R. for the respondent, it appears that the respondent has not taken into consideration Ministry of Commerce's instructions issued vide OM.No.16(I)/2005-E.1, dated 17.08.2007, and as communicated by FBR vide it letter C.No.3(59)/EP/96, dated 22.08.2007, and its letter of even number dated 10.10.2007. The claims of rebate filed by the appellant should have been considered in the light of these instructions and action should have been taken subsequently, provided they had failed to produce the verified documents from the respective quarters.

21.In view of the above discussion, I allow the appeal and condone the delay with the directions to the respondents to sanction the rebate claim w.e.f. 10.06.2007 and onwards filed by the appellant. The appeal stand disposed of accordingly.

HBT/67/Tax(Trib.)Appeal allowed.