COLLECTOR OF CUSTOMS through Additional Collector Custom, MCC-Gwadar, Gaddani VS BYCO PETROLEUM PAKISTAN LTD.
2019 P T D 110
[Balochistan High Court]
Before Jamal Khan Mandokhail and Zaheer-ud-Din Kakar, JJ
COLLECTOR OF CUSTOMS through Additional Collector Custom, MCC Gwadar, Gaddani
Versus
Messrs BYCO PETROLEUM PAKISTAN LTD. and others
Custom Reference Applications Nos. 16, 17 and 18 of 2017, decided on 02/08/2018.
(a) Administration of justice---
----"Doing of a thing"---Principle---When an act requires a thing to be done in a specific manner; it must be done in same manner or not at all.
(b) Customs Act (IV of 1969)---
----S. 32(3)---Show-cause notice---Preconditions---If notices issued by authorities do not contain specific allegations of false statement, such notices do not fulfill criteria of violation of S.32(3) of Customs Act, 1969---Such show-cause notices are defective and no adjudication can be initiated upon same.
Assistant Collector Customs (ACC) v. Khyber Eclectic Lamps 2001 SCMR 838 rel.
(c) Customs Act (IV of 1969)---
----Ss.19, 32(3), 79, 179 & 196---Sales Tax Act (VII of 1990), S.3(2)---Notification SRO No. 678(I)/2004 dated 07-08-2004---Import Policy Order, 2013, Para. 12(a)---Reference---Show-cause notice, issuanceof---Temporary import for re-export---Submission of Bank guarantee---Scope---Tug boats were imported for offloading oil tankers and importer companies submitted corporate guarantees as same were to be re-exported---Customs authorities issued show-cause notices claiming that importer companies had violated provisions of Ss.32(3) & 79(1) of Customs Act, 1969---Appellate authority directed customs authorities to withdraw show cause notices and orders passed by Appellate authority was maintained by Customs Appellate Tribunal---Validity---Provisions of Import Policy Order, 2013 allowed temporary import-cum-re-export of goods mentioned therein---Goods Declaration clearly showed that tugs were imported temporarily with intention to re-export them---Importer company had submitted Bank guarantee to satisfaction of customs authorities in such behalf, therefore, it was not an import simplicitor---Tax and duties applicable on permanent import of goods could not be imposed on temporary-cum-re-export of goods---If customs authorities disputed exemption of duties upon tugs in question imported by company, remedy provided by Notification SRO No.678(I)/2004 dated 07-08-2004 was to be adopted but instead, show-cause notice were issued which was violation of Notification SRO No.678(I)/2004 dated 07-08-2004---Importer company intended to import tugs temporarily, therefore, Federal Board of Revenue permitted them to do so---Once competent authority had allowed respondents to import tugs temporarily with an undertaking to re-export them, then there was no occasion for customs authorities to issue show-cause notices---High Court declined to interfere in the matter as authorities had failed to point out any illegality or irregularity or jurisdictional defect in concurrent findings of law and fact of two forums below---Reference was dismissed in circumstances.
Iklaq Shah, Assistant Attorney General for Petitioner.
Zafar Iqbal and Mazhar Ali Khan for Respondents.
Date of hearing: 18th May, 2018.
ORDER
JAMAL KHAN MANDOKHAIL, J.---Fact of the case are that the respondent company imported three Tug boats for offloading oil tankers. In this behalf, two goods declarations were submitted on 21.2.2013, whereas one good declaration in respect of third Tug boat was submitted on 30.6.2014. It is contended that these Tug boats were imported on temporary basis for a period of three years, against corporate guarantees and were to be re-exported. The Collector Customs adjudication on 17.4.2015, issued a show cause notice, alleging therein that the respondent has violated the provisions of Section 32(3) and Section 79(1) of the Customs Act, 1969. The respondent replying the show cause notice denied the allegation and alleged that the Collector Customs has no jurisdiction to adjudicate the matter, consequently, the Collector Customs Adjudication, withdrawn, his notice and has held as under,
"The matter has been examined in the light of SRO.371(I)/2002 dated 15.06.2002 which is categorical regarding appropriate officer in the context of subsections (2) and (3) of section 32 of theCustomsAct, 1069. It is held that no mensrea isinvolvedin the instant case therefore the appropriate officer for sub-section (3) of section 32 is Superintendent/Principal Appraiser of the Collectorate. The Show-cause notice invokes subsection (3) of section 32 of the Customs Act, 1969. Hence it is concluded that this forum lack jurisdiction to adjudicate the contravention report forwarded by the Collectorate. Accordingly the show-cause notice is vacated on account of lack of jurisdiction."
2.Feeling aggrieved, the Collector Customs MCC-Gawadar filed an appeal before the Custom Appellate Tribunal, which was dismissed on 1.3.2017 hence this reference.
3.The learned AAG stated that the Tug boats do not fall within the provisions of the Import Policy Order (IPO), therefore, they were to be imported subject to payment of taxes, duties and penalties. The learned AAG stated that the Collector Customs Adjudication has ignored the SRO No.886(I)/2012 dated 18.7.2012, which has an overriding effect over the SRO No.371(I)/2002, therefore, the Collector Customs Adjudication had jurisdiction into the matter, but it has wrongly vacated the show-cause notice. The learned AAG stated that as per Section 179 of the Customs Act, the Collector Customs Adjudication had unlimited power to adjudicate and to issue a show-cause notice for the recovery of taxes and duties, whereas the Superintendent has only limited jurisdiction up to Rs.50,000/-, but this fact was ignored by the Collector Customs as well as by the Tribunal. The learned AAG further stated that the Tribunal and the Collector Customs Adjudication have failed to consider that the respondent company is not an exploration company, therefore, was not entitled for the benefits of IPO, hence committed an illegality and irregularity. The learned AAG lastly contented that the forum below have not dilated upon the principle laid by the Hon'ble Supreme Court of Pakistan in the case of Lever Brother (Pvt.) Ltd. v. Customs Appellate Tribunal, therefore, the orders impugned are illegal and unlawful.
4.The learned counsel for the respondent opposed the contention and stated that SRO No. 886(I)/2012, determines the territorial jurisdiction of the Adjudicating, whereas, the Notification No.371(I)/2002, assigning power of adjudication to the Superintendent, therefore, the Collector Customs has rightly withdrawn the notice. The learned counsel stated that at the time of submission of goods declaration, the respondent has clearly mentioned the facts in them, which were accepted by the petitioner, and they remained silent for more than two years, therefore, reopening the matter at this billeting stage is otherwise not permitted by Section 195 of the Customs Act. The learned counsel stated that the Federal Government has already directed the Colltotiate to release the Tug boats, which were imported temporarily, without payment of duties and taxes, therefore, the Customs authorities being subordinates to the Federal Government cannot reopen the matter. He in the end stated that Para 12 of the IPO clearly states that temporary import of items/machinery are permitted on import cum export basis, without duties and taxes. He stated that since the respondent has imported tug boats for a limited period with an intention to re-export them again and in this behalf, guaranties were also submitted, therefore, the action taken by the Collector Customs under Section 32(2) was not only illegal, but was also without jurisdiction, therefore, the forum below were justified in passing the order impugned. The learned counsel added that the notice inquestion does not fulfill the requirement of Section 32(2), therefore, the same is illegal. On this score as well, the show-cause notices were wrongly issued, which were rightly withdrawn, the learned counsel added.
5.We have heard the learned counsel for the parties and have gone through the available record. These references have been filed against the concurrent findings of forum below, holding that the collector customs adjudication had no jurisdiction to issue the show-cause notice, that the notice does not contain a specific allegation of error, misconstruction or inadvertence and that the Tugs in question were imported temporarily with an intention to re-export them. The learned AAG raised certain questions of law in these references, therefore, we have to consider them.
6.The show-cause notice, was issued by the collector customs adjudication by exercising power under Section 32 of the Act, which is reproduced herein below,
"Section 32 [Untrue statement, error, etc---(I)---
(a)----
(b)----
(c)----
(2) Where, by reasons of any such document or statement as aforesaid or by reason of some collusion, any duty [taxes] or charge has not been levied or has been shot-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [five] years of the relevant date, requiring him to show cause why he should not pay amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruc-tion, any duty [taxes] or charge has not been levied or has been short levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [three years] of the relevant date requiring him to show cause why he should not pay the amount specified in the notice"
According to the above provision of law, all the recovery cases are to be adjudicated by the appropriate officer, according to the pecuniary limits of duties and taxes. The word appropriate officer used in subsection (2) of Section 32 of the Act has been defined in Section 2(b) of the Act, which is reproduced here in below,
"Section 2.
[(b) "appropriate officer" means the officer of customs to whom such functions have been assigned by or under this Act or the rules made thereunder] "
7.In exercise of power conferred by clause (b) of Section 2 of the Act the Federal Board of Revenue vide Notification No.S.R.O. 371(I)/2002 dated 15-6-2002 notified the Superintendent, Principal Appraiser, Inspector, Preventive Officer/Ministers clerk as appropriate officer and were assigned powers to functions accordingly. Thus, in case of violation of any provision of Section 32 and Section 179 of the Act, the appropriate officer is competent to issue a show-cause notice, but none of the notices was issued by any of the referred appropriate officer, rather it was issued by the Collector Customs Adjudication. It is settled principle of law that when an act required a thing to be done in a specific manner, it must be done in the same manner or not at all. This proposition of law has clearly been violated by the Collector Customs Adjudication, which was an illegality, therefore, the Custom Appeal and the Custom Appellate Tribunal were right in holding so.
8.It is to be noted that the notices issued to the respondents do not contain a specific allegation of false statements, as such, these do not fulfill the criteria of violation of subsection (3) of Section 32 of the Act. Thus, the show-cause notices in question were defective, therefore, no adjudication can initiated upon the same. In this behalf, reliance has been placed on the case of Assistant Collector Customs (ACC) v. Khyber Eclectic Lamps reported in 2001 SCMR 838. The forums below were correct in holding that the notices were not in accordance with law.
9.Without prejudice to the above, even otherwise, the show-cause notices were to be issued on the basis of material mentioned in the Goods Declaration (GD). Perusal of the same would reveal that the respondent has declared that the Tugs in questions were imported on temporary basis. The Government of Pakistan by exercising power conferred upon it by Subsection (1) of Section 3 of the Import and Export (Control Act) 1950, has passed an order S.R.O No.193(I)/2013 dated 8-3-2013, promulgated an Import Policy Order, 2013 (the Policy). Clause (a) of Para No.12 of the policy relates to the temporary import, which is reproduced here in below,
"(a) construction companies or firms or oil and gas companies, oil exploration and production companies, mining companies, their authorized or approved contractors, sub-contractors and service companies, and refineries shall be allowed to import all plant, machinery and equipment including specialized machinery whether new or used except secondhand or used passenger vehicles, trucks, buses and static road rollers of 10-12 tons capacity, 55HP. Certification of the Chief Executive of a company of the respective sector-endorsing requirement of the contractor, sub-contractor or service companies shall be required:
Provided that permanent retention of all permissible categories of machinery or equipment imported on temporary basis by construction companies shall be allowed by the Federal Board of Revenue subject to payment of all duties and taxes to be assessed by the Customs under relevant laws."
10.The above provision of the Import Policy allows the temporary, import-cum-re-export of goods mentioned herein above. As the goods declaration clearly shows that the Tugs were imported temporarily, with an intention to re-export them. The respondents submitted bank guarantee to the satisfaction of the customs authorities, in this behalf, therefore, it cannot be said that it was an import simplisitor. Under such circumstances, the tax and duties applicable on permanent import of goods, cannot be imposed on temporary-cum-re-export goods. The Collector Customs Adjudication while issuing the show-cause notice, over looked this aspect.
11.It is also import to mention here that the Government of Pakistan by exercising power conferred upon it by Section 19 of the Act and clause (a) of subsection (2) of Section 3 of the Salas Tax Act, issue a Notification S.R.O. No.678(I)/2004 dated 7-8-2004, pursuant to which, the Federal Government was empowered to exempt the following items from customs duty and sales tax. Clause (I) of the notification is relevant, which is reproduced here in below,
"(I) machinery, equipment, materials, specialized vehicles or vessels, pick-ups (4x4), helicopters, aircraft, accessories, spares, chemicals and consumables, as are not manufactured locally, imported by the Exploration and Production (E&P) Companies, their contractors, sub-contractors and service companies, from customs-duty in excess of five per cent ad valorem levialbe under the First Schedule to the Customs Act, 1969 (IV of 1969), and the whole of sales tax levialbeunder the Sales Tax Act, 1990, on their import and subsequent supply, subject to the conditions specified under the caption "CONDITIONS WITH REFERENCE TO CLAUSES (I), (2) {3[AND (2A)] "
Similarly, the said Notification contains certain conditions with reference to the implementation clause I, the relevant clause of the Notification is reproduced herein below:
"(iv) in the event a dispute arises whether any item is entitled to exemption under this notification, the item will be immediately released by the Customs Department against a corporate guarantee valid for a period of nine months, extendable by the concerned Collector of Customs on time to time basis. A certificate from the relevant Regulatory Authority that the item is covered under this notification shall be given due consideration by the Customs Department towards finally resolving the dispute. Disputes regarding the local manufacturing only shall be resolved through the Engineering Development Board"
12.In view of the above condition (iv), since the petitioner/custom authorities have disputed the exemption of the duties upon the Tugs in question imported by the respondent, therefore, the remedy provided by the Notification SRO No.678, was to be adopted, but instead, the show-cause notices have been issued, which is a violation of the Notification. As the respondents intends to import the Tugs temporarily, therefore, the Federal Board of Revenue vide letter No.I(7) March/94-Pt-3/169111 dated 8-2-2013, permitted them to do so. Once a competent authority has allowed the respondents to import the Tugs temporarily with an under taking to re-export them, then there was no occasion for the Collector Customs Adjudication to issue the show-cause notices. The points raised by the learned AAG through all these petitions are not convincing. He has failed to point out any illegality or irregularity or jurisdictional defect in the concurrent findings of law and fact of the forum below, warranting interference.
Thus, in view of above, the references in hand are dismissed. Since the respondents have already suffered a lot, therefore, the customs authorities shall allow them to re-export the Tugs as early as possible.
MH/77/Bal.References dismissed.