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Petitioner: UNION SPORT PLAYING CARDS COMPANY VS Respondent: COLLECTOR OF CUSTOMS and JUDGMENT
Court Name: Sindh High Court Judge(s): Zahid Kurban Alavi, Muhammad Mujeebullah Siddiqui Title:UNION SPORT PLAYING CARDS COMPANY vs COLLECTOR OF CUSTOMS and
JUDGMENT
Reported As: 2002 MLD 130 Result: Appeal allowed Judgment JUDGMENT ' MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---In this appeal under section 196 of the Customs Act, 1969, the appellant has contended that the following questions of law arise out of the order of the Customs, Excise and Sales Tax Appellate Tribunal's order dated 19-9-2000, in Customs Appeal No,96 of 2000.:- 1. Whether exemption from the payment of whole of customs duty and sales under Customs General Order No,1/83 dated 9-1-1983 on the goods imported into and exported from the Export Processing Zone under S.R.O. 881(1)/80, dated 23-8-1980 and special permission granted to the Industrial Undertakings established in the Export Processing Zone for duty free import of vehicles for transport of labour by each industrial undertaking contained in the C.B.R. No,1980-81, Cus. Exp/5(17) dated 11-4-1982 is restricted to the import of vehicles not exceeding 1600 c.c. Engine capacity? 2. Whether in the given circumstances of the case and the facts and grounds stated hereinafter case of the appellant falls within section 32(2) of the Customs Act, 1969 or within the preview of section 32(3) of the Customs Act, 1969? 3. Whether respondent No,2 after issuing certificate of Import on 26-3-1996 and after taking a stand before the Customs Excise and Sales Tax Tribunal, Karachi to the effect that the vehicle in question was categorised as vehicle for use and transportation of labour and Executives was legally competent to take a somersault and state before respondent No,2 that the vehicle in question was a luxury class vehicle? 4. Whether under the provisions of Ordinance No,IV of 1980, S.R.O. 249(1)/81, dated 25-3-1981, S.R.O. 991(1)/80, dated 23-8-1980, Customs General Order No,1/83, dated 23-8-1983 or under any other
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law there is any restriction/embargo on the Establishment operating its establishment in the Karachi Processing Zone, from providing a fully loaded luxury vehicle for the use of transporting its labour and Executives? ' The facts giving rise to this appeal are that the appellant is engaged in the business of manufacturing playing cards in running Export Processing Zone Landhi. The Government of Pakistan has given various incentives to the establishments working in Karachi Export Processing Zone. One of the incentives is that the Government has allowed exemption from Customs duty and Sales-tax for all goods imported into and exported from Processing Zone., vide S.R.O. 881/(1)80, dated 23-8-1980, which reads as follows:-- MINISTRY OF FINANCE AND ECONOMIC COORDINATION Islamabad, the 23rd August, 1980 Customs ' S.R.O. 881(1)80.--In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and section 7 of the Sales Tax Act, 1951 (III of 1951), the Federal' Government, subject to such conditions, limitations and restrictions as the Central Board of Revenue may impose from time to time, is pleased to exempt from the whole of customs-duties and sales tax leviable on all the goods imported into and exported from the Export Processing Zones established under the Export Processing Zones Authority Ordinance, 1980 (IV of 1980). ' In pursuance of above S.R.O., the C.B.R. Issued CGO-1/83, dated 9-1-1983, which was amended by C.G.O. 22/88, dated 26-10-1998, which reads as follows:- "In pursuance of exemption from the payment of whole of customs duty and sales tax granted on the goods imported into and exported from the Export Processing Zone under S.R.O. 881(1)/80, dated 23-8-1980 and special permission granted to the industrial undertakings established in the Export Processing Zone for duty free import of vehicles for handling and transportation of the goods out side the limits of Export Processing Zone and further the duty free import of a car for office use (not exceeding 1600 CC Engine Capacity) and a vehicle; for transport of labour by each industrial undertaking contained in the C.B.R. U.O. No,1980-81. Cus. Exh./5(17), dated 11th April, 1982..." ' The appellant availed, the concession allowed through the above S.R.O. And C.G.Os. And applied to the respondent No,2, the Karachi Export Processing Zone Authority for certificate of import which was issued on 26-3-1996. After complying all the formalities, the appellant imported a Toyota Land Cruiser, Station Wagon (hereinafter referred to as the vehicle) for transportation of its staff. After importation of the vehicle, the appellant filed Bill of Entry on 23-7-1996 for clearance. In the Invoice, certificate of import and all other documents, the full particulars of the said vehicle are given which are as follows:-- "B/New, Toyota Land Cruiser Station Wagon Lift Back (XV), 5 Door, 9 seater, Model Code HDJ 80R- Nmex, 4164 CC Diesel Engine, 5 Speed Manual floor shift Transmission, dual A.C., Power Steering, Power Window, Model 1996, With All Std. Equipments." ' The clearance was allowed free of duty and after lapse of about one year of filing of the Bill of Entry, a show-cause-notice was issued by the respondent No,1, on 17-7-1997, which is reproduced below:-- GOVERNMENT OF PAKISTAN COLLECTORATE OF CUSTOMS (EXPORTS) CUSTOM HOUSE, KARACHI No, SI/MISC/153/97-EXP, Mfg. Bond. July 17, 1997. SHOW-CAUSE NOTICE ' Whereas, M/s. Union Sports Playing Cards Company, Plot No,10, Sector A-4, Export Processing Zone, Karachi filed Bill of Entry No,6954 dated 23-7-1996 I.G.M. No,1035/96, dated 21-7-1996, Index No,41, for the clearance of one Toyota Land Cruiser Station Wagon Lift Back (XV) 5 door 9 seater, Model 1996
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HDJ80R-GNMEX imported from M/s. Toyota Tsusho Corporation, Nagoya, .Japan. The vehicle was assessed to duty @ 110% under PCT heading 8703.3300 but clearance was allowed free of duty on the basis of import authorization certificate issued by the KEPZ authority in terms of Notification S.R.O. 881(1)/80, dated 23-8-1980. 2. And whereas, subsequently an information was received to the effect that the aforesaid vehicle was illegally imported into Karachi Export Processing Zone, Karachi without payment of duties and taxes. The matter was investigated and it was found that the subject vehicle did not qualify for exemption from duty/taxes in terms of S.R.O. 881(1)/80, dated 23-8-1980 read with CGO 1/83 dated 9-1-1983 as amended vide CGO 22/88, dated 26-10-1998 as well as read, with clause (4) of rule 30 of the Customs Export Processing Rules promulgated vide S.R.O. 249(1)/81 dated 5-3-1981. According to the above provisions of law, exemption from payment of duty/taxes was available only to such vehicles which had displacement upto 1600 CC.d while the engine displacement of the subject vehicle was 2400 CC. Thus, the vehicle had unlawfully been cleared for KEPZ without payment of duty/taxes by M/s. Union Sports Playing Cards Company in collusion with clearing Agents M/s. Atlas Trading Corporation (CHAL No,909), the K.E.P.Z. Authorities as well as Customs Officials. The assessable value of the vehicle was Rs,13,65,100. Thus, an amount of Rs,23,55,880 had been evaded in this case and an offence had been committed under sections 16 and 32 of the Customs Act, 1969 read with section 3 (1) of the Imports and Exports (Controls) Act, 1950 and Notification S.R.O. 881(1)/80 dated 23-8-1981 as well as S.R.O. 249(1)/81, dated 5-3-1981 punishable under clauses (9) and (14) of subsection (1) of section 156 of the Customs Act, 1969. 3. Now, therefore, M/ s. Union Sports Playing Cards Company, KEPZ authorities, relevant Customs officials and Clearing Agent M/s. Atlas Trading Corporation (CHAL No,909) are called upon to show cause within fifteen days of the issuance of this notice as to why the amount of evaded duty/taxes should not be recovered from them and penal action taken against them under the aforesaid provisions of law. The Clearing Agents M/s. Atlas Trading Corporation (CHAL No,909) are also called upon to show cause as to why their licence should not be revoked in terms of section 19 of the Clearing Agents (Licensing) Rules, 1971 besides taking penal action against them. 4. Hearing in this case has been fixed for 30-7-1997 at 11-00 (a.m.) on which date and time M/s. Union Sports Playing Cards Company, Clearing Agents M/s. Atlas Trading Corporation (CHAL No,909), KEPZ authorities and Customs Officials concerned or their representative or their duly briefed lawyer may appear to defend the case. If no written reply to this show-cause notice is received within the period stipulated above or no one appears for hearing on the scheduled date and time, it will be presumed that the respondents do not wish to contest the charges and the case will, then, be decided ex parte on the basis of the evidence available on record. 1. M/s. Union Sport Cards Corporation, Plot No,10, Sector A-4, K.E.P.Z., Landhi, Karachi. 2. M/s. Atlas Trading Corporation, (CHAL No,909), 3/4, Arkey Square, New Challi, Shahrah-e-Liaquat, Karachi. 3. M/s. Karachi Export Processing Zone Authority, Karachi. (Sd.) (MEHMOOD ALAM), Collector." ' The appellant replied the show-cause-notice stating that the restriction of 1600 CC engine capacity related to duty free import of a car for office use, further explaining that the said vehicle was imported for the purpose of transportation of staff and executives on which no restriction of engine capacity was prescribed. The respondent No,1 kept quite for about 28 months and again issued a notice on 1-11-1999 calling upon the appellant to appear before respondent No,1, on 11-11- 1999. The respondent No,1, ultimately heard the appellant and vide order dated 18-1-2000, directed for confiscation of the vehicle under Clauses (9) and (14) of section 146 of the Customs Act, 1969.
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The appellant being aggrieved preferred first appeal before the Customs, Excise and Sales Tax Appellate Tribunal. The appeal was dismissed on 19-9-2000. Being still dissatisfied, the appellant has preferred this second appeal before us. ' We have heard Mr. Abul Inam, learned counsel for the appellant and Mr. Raja Muhamamd Iqbal, learned counsel for the respondent No,l. ' While dealing with the Question No,1, above, Mr. Abul Inam, learned counsel for the appellant has submitted that in the Show-cause notice, dated 17-7-1997 the respondent No,1, has stated that the exemption from payment of duty/taxes was available to such vehicles only, which had displacement up to 1600 CC, while the engine displacement of the vehicle was 2400 CC and, therefore, the vehicle was unlawfully cleared for KEPZ without payment of duty/taxes by the appellant. He has further drawn our attention to the order-in-original by the respondent No,1, wherein the plea of appellant has been recorded to the effect that the restriction of 1600 CC engine capacity was applicable to the car for office use only and not to the vehicle imported for the staff transportation. He has further drawn our attention to the reply of respondent No,2, dated 22-8-1997, reproduced in the order of respondent No,1, which reads as follows:-- (i) EPZA is allowing to the industrial undertakings of KEPZ to import three types of duty free vehicles i,e, one vehicle for handling and transportation of the goods outside the limits of the Zone, one vehicle for transportation of labour and staff and one car for office use (not exceeding 1600 CC engine capacity) in accordance with the procedure laid down for expeditious clearance of the duty free vehicles at the time of importation notified by CBR vide CGO No,1/83, dated 9-1-1983. (ii) We would like to clarify that restriction of 1600 CC engine capacity is confined to CARS only as clearly mentioned in the above referred CGO. The restriction on engine capacity do not apply to the vehicles imported for transportation of Executive/labour for example van and buses and vehicle meant for transportation of goods like trucks, pick-ups etc. (iii) The certificate of import issued to M/s. Union Sport Playing Cards Company for import of Toyota Land Cruiser clearly contain the purpose of transportation i,e,, transportation of Executive/labour, Copy of COI is provided to Customs at the time of clearance by the importer. (iv) EPZA had issued certificate of import after observance of laid down criteria on the subject to M/s. Union Sport Playing Cards Company for importation of Toyota Land Cruiser Station Wagon. It may not be out of place to mention that EPZA in the past have issued the COIs for the same vehicles to M/s. Pakore Garments in 1993. M/s. Millton Exports in 1996 etc, these vehicles were cleared by Customs. (v) It is evident from the position explained above that restriction of 1600 CC engine capacity do not apply to the vehicle imported by M/s. Union Sport Playing Cards Company for transportation of Executives/Labour. Hence the position taken by the Customs is not correct." ' He has further submitted that at the instance of respondent No,1 the respondent No,2, while confirming that the customs authorities have been allowing import of duty free Toyota Land Cruiser, in earlier years changed its version which is reflected in the second reply addressed to respondent No,1, which reads as follows:- (i) Export Processing Zones Authority hereby confirms that the transportation of executives and labour should have not been clubbed together and here is definitely a categorization of vehicles used for transportation of labour/goods and that of Executives. (ii) The imported Toyota Land Cruiser (VX) 4 x 4 drive vehicle fully loaded falls in the luxury class vehicle. However, it is also a fact that these Land Cruisers in question were imported in 1993 and 1996 and the Customs Authorities have cleared them for the use under which EPZA had issued above noted certificate of import under the category of vehicle for transportation of labour. It is also a fact that the Customs Authorities after having cleared those vehicles at different period of
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years i,e, 1993 and 1996 did not raise any objection at that time till this has been pointed out just patently vide your letter referred to above. (iii) We may further apprise you of the fact that Export Processing Zones Authority having realising this fact that the vehicles which were imported under the category of vehicle for transportation of labour were not in conformity with the specified category under the CGO stopped forthwith issuing such kind of import certificate to the Investors who applied to avail such facility. Please kindly appreciate that the EPZA since then have decided to only allow the domestic vehicles to the Investors up to 1600 CC one in three years time. All such measures have been taken in order to avoid misuse of facility by the Investors of EPZA/KEPZ." ' On the basis of second reply of the respondent No,2, the respondent No,1, in his order dated 18-1- 2000 observed that EPZA Authorities have accepted that 4 x 4 wheel vehicle do not fall under the category of vehicle importable for executives and may not be used for transportation of labour and it was not in conformity with the specified category under CGO 1/83. The respondent No,1, further observed that the said vehicle was not covered under CGO 1/83 for use of the executive, as its engine capacity is 4164 CC and, therefore, the violations/offence stands established. The respondent No,1, further observed that there is no terrain inside or outside KEPZ where 4 x 4 vehicle are required or needed. He expressed opinion that import of vehicles is misleading and exemption of customs duty and other such taxes were incorrectly allowed. He subsequently confiscated the vehicle in favour of the Federal Government. ' Mr. Abul Inam, has submitted that the S.R.O. 881(1)/80, dated 23-8-1980 is general in terms and has allowed exemption from the whole of Customs duty and Sales Tax leviable on the goods imported into and exported from the Export Processing Zone. However, it is subject to such limitations and restrictions as Central Board of Revenue, impose from time to time. The C.B.R. Issued two CGOs, in this behalf being No,1 of 1983 dated 9-1-1983 and 22 of 1988, dated 26-10-1988. The CGO as amended on 26-10-1988 clearly envisage the duty free import of three categories. First, vehicle for handling and transportation of the goods out side the limits of Export Processing Zone, secondly duty free import of a car for office use not exceeding 1600 CC engine capacity and thirdly a vehicle for transportation of labour for each industrial undertaking. He has further submitted that a bare reading of the CGO 1/83 as amended by CGO 22/88, leaves no room for any doubt that three categories of vehicles have been allowed to be imported duty free and the respondent No,1, has also accepted the proposition in his order. Mr. Abul Inam, has submitted that the respondent No,1, misdirected in holding that the restriction of 1600 CC engine capacity was applicable to the third category of vehicle also and in doing so the respondent No,1, had not assigned any reason except that the 'respondent No,2, has accepted that the said vehicle does not fall under the category of vehicle importable for executives and may not be used for the transportation of labour. The learned counsel has further submitted that the learned members of the Customs, Excise and Sales Tax Tribunal, also fell in error and incorrectly interpreted the provisions of CGO 1/83 as amended by .CGO 22/88. "Mr. Abul Inam has drawn our attention to the plea which was taken before the Tribunal to the effect that the words "not exceeding 1600 CC engine capacity" were inserted in CGO 1/83 by CGO 22/88 after the words "import of a car for office use" and before the words "and a vehicle", for transportation of labour by each industrial undertakings". ' The Tribunal has recorded the contention of the appellant to the effect that the displacement up to 1600 CC engine would only cover the cars and not the vehicles but instead of giving any finding on this point and reading the CGO according to its plain language decided the issue on extraneous consideration. In support of his contention he has drawn our attention to para.8 of the impugned order. According to the learned members of the Tribunal the said vehicle cannot be said to be a vehicle for the purpose of transportation of officers and labour of an industrial unit. They further
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observed that for all intents and purposes, the vehicle in question can be said to be a luxury car and as such the exempt claim on the basis that it is a vehicle cannot sustain Mr. Abul Inam, has further contended that the learned members of the Tribunal have also placed reliance on the changed plea of respondent No,2, to the effect that a 4 x 4 wheel drive fully loaded vehicle falls in luxury class vehicle and, therefore, it can be categorised as a luxury car which was not entitled to any exemption. Mr. Abul Inam, has contended that the question of exemption is required to be decided on the basis of plain language contained in CGO No,1/83 as amended by 22/88 and not on subjective consideration or presumptions to the effect that it can be used for any other purpose. He has submitted that if the department is in possession of any evidence that the vehicle has been misused and if such act constitutes any offence or empowers the concerned authorities to withdraw the exemption or levy any penalty the customs authorities may proceed in accordance with the law. However, merely on the basis of some apprehensions, subjective opinion and conjectures and surmises, the concession available in law cannot be denied. ' On the other hand Mr. Raja Muhammad lqbal, learned counsel for the respondent No,1, has supported the impugned findings of the respondent No,1 and the Customs, Excise and Sales Tax Appellate Tribunal. He has contended that the said vehicle is not being used for the transportation of labour and consequently the exemption was not available to the appellant for importing the said vehicle duty free and the respondent No,1, has rightly confiscated the vehicle on account of nonpayment of customs duty. We asked Mr. Raja M. Iqbal, to show from the show-cause-notice if the respondent No,1, received any such information and issued the notice on the basis of such information. Mr. Raja M. Iqbal, had no option but to concede that the show-cause-notice is completely silent on this point and that the sole reason for the issuance of show-cause-notice was the view that said vehicle did not qualify for exemption from duty/taxes in terms of S.R.O. 881, dated 23-8-1980 and CGO No,1/83 as amended by CGO No,22/88. ' We have carefully considered the contentions raised by the learned Advocates for the parties, the material available on record, including the show-cause-notice and the impugned orders of respondent No,1 and the Customs, Excise and Sales Tax Appellate Tribunal. We are persuaded to agree with the submissions of Mr. Abul Inam, that the correct principles of the interpretation of tax laws have not been adhered to by the respondent No,1, as well as the learned members of the Customs, Excise and Sales Tax Appellate Tribunal. The established principle applicable to the taxing statutes/laws is that while applying and implementing fiscal legislation, if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the A taxing authorities seeking to recover a tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appears to be the principle enunciated by Lord Rowlet in 1917, has been followed consistently by the superior Courts in England, Pakistan, India and Bangladesh, which is as follows:-- "In construing a taxing statute one has to look merely at what is clearly said. There is no equity about a tax. There is no room for any intendment. There is no presumption as to a tax. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language used." ' Applying the above classical principle to the facts of this case and looking to the impugned orders of the learned two authorities below, we, find that in the CGO No,1/83 as amended by CGO 22/88, the words used are that in pursuance of exemption from the payment of whole customs duty and sales tax granted on the goods imported into and exported from the E.P.Z. Under S.R.O. 881(1)/80, dated 23-8-1980 and special permission granted to the industrial undertakings established in the Export Processing Zone for duty free import of vehicles for handling land transportation of the goods outside the limits of E.P.Z. And further the duty free import of a car for office use (not exceeding 1600 CC engine capacity) and a vehicle; for transport of labour by each industrial
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undertaking contained in CBR U.O. No, 1980-81 Cus. Exh.5(17), dated 11-4-1982, following procedure is prescribed for expeditious clearance of the vehicles at the time of importation. We find that three categories of vehicles are clearly envisaged, first, vehicle for handling and transportation of goods, secondly a car for office use not exceeding 1600 CC enging capacity and thirdly a vehicle for transportation of labour. The word "and" has been used in between one and the other category. It is established principle of the rule of interpretation that normally the word "and" is used in disjunctive sense until and unless shown to be otherwise. Applying the two principles, first, that in respect of fiscal matters the Courts should look merely that what is clearly said and there is no room for any intendment of presumption and secondly that the word "and" is clearly used in disjunctive sense, we are of the considered view that the restriction of 1600 CC engine capacity is applicable to second category of vehicle i,e, a car for office use only and is not applicable to the import of a vehicle for transportation of labour. We are of the opinion that the question at Serial No,4 is also covered by the discussion made above. We find that the respondent No,1, in its impugned order dated 18-1-2000 has heavily relied on the changed version of respondent No,2 and the learned Tribunal also appears to be impressed by the changed version of respondent No,2. The plea of exemption claimed by the appellant is to be examined on the touchstone of the S.R.O. 881, dated 23-8-1980 and CGO issued by the CBR and not on the basis of opinion/version held by the respondent No,2. We further find that the respondent No,1, while 'folding that the said vehicle imported by the appellant does not enjoy exemption has considered the facts which are not germane to the question of exemption available in law. The existence of any terrain inside or outside Export Processing Zone, is totally…
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