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Petitioner: SALEEM & CO. and others VS Respondent: CENTRAL BOARD OF REVENUE and others
Court Name: Lahore High Court Judge(s): Tanvir Ahmed Khan, Sh. Ijaz Nisar Title: SALEEM & CO. and others vs CENTRAL BOARD OF REVENUE and others Case No.: Writ Petition No,17231 of 1995 Date of Judgment:1996-08-28 Reported As: 1997 PTD 1901 Result: Order accordingly
Judgment JUDGEMENT ' TANVEER AHMAD KHAN, J.---As common question of law is involved in all these petitions, the schedule whereof is appended. As such, we propose to dispose of them by this single judgment. ' Facts briefly are that through Notification/S.R.O. No, 1050(1) of 1995, dated 20-10-1995 emanated from the Ministry of Finance and Economic Affairs. Government of Pakistan regulatory duty was imposed upon the goods imported into Pakistan at a rate of 5% and 10% ad volarem respectively excepting certain goods, the particulars whereof are given in the Notification itself. ' The exception has also been taken to another Notification similarly emanated from the Ministry of Finance and Economic Affairs, Government of Pakistan whereby exemption earlier granted/accorded under section 13 of the Sales Tax Act, 1990 through different S.R.Os. In the payment of Sales Tax, issued earlier have been withdrawn through Notifications dated 4-4-1996. ' It is argued that the impugned Notifications cannot be made applicable to the petitioners for the reason that in some cases contract for the import of goods had already been completed with the foreign manufacturers prior to the promulgation/issuance of impugned S.R.Os. While in another L.Cs. Had been opened and in some cases goods subject-matter of the Constitutional petition had already been imported into Pakistan. Elaborating it further learned counsel have pointed out that section 30 of the Customs Act, 1969 provides dates on the basis of which the value and the rate of duty are to be determined, which inter alia, provides that in case of goods declared for home consumption under section 79, the value of the imported goods and rate of duty shall be, on the basis of date on which a bill of entry is presented under that section. Since in some cases the goods had been imported before the levy of regulatory duty by virtue of Notification dated 29-10- 1995, the concerned importers Would be liable to pay the same under the impugned Notification.
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' Another argument has been advanced that during the currency of exemption granting/concessional Notifications the regulatory duty which is in essence, a customs duty, cannot be imposed as the same would tantamount to depriving the petitioners of their vested right. It is further contended that even by the Notification in question the importers stand exempted from the payment of regulatory duty because under clause II(b) of the Notification the goods chargeable to duty at the rate of 65 % ad volarem are exempted from the payment of regulatory duty. Elaborating their arguments they contended that if the concession granted by various S.R.Os. Had not been there, the petitioners would have been required to pay customs duty at the rate of 65%. And if the intention had been to charge regulatory duty on the goods levialble to 65 % customs duty also no exception would have been created in the impugned Notification. A prayer has been made for refund of the regulatory duty recovered from the petitioners falling in the above category. In this behalf reliance has been made on Gadoon Textile Mills Ltd. AL Assistant Collector and others PLD .1992 Pesh. 191, M/s. Khyber Agro (Pvt.) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853 (Peshawar). The regulatory duty/sales tax, it is argued, are confiscatory in nature and no reason at all has been advanced for their imposition and the circumstances prevailing in the country in fiscal circle have not been mentioned warranting their imposition. ' Learned counsel for the Customs Department as well as learned Deputy Attorney-General have supported the impugned S.R.O. Contending that section 18(2) of the Customs Act, 1969 is a self- contained provision providing for the imposition of regulatory duty, as such, the exemption granted under section 19 of the Customs Act would not encompass this levy. Being a different levy, the benefit provided under the exemption granting Notification, cannot be extended to cover the regulatory duty levied through impugned Notification and no vested right can be claimed by the petitioners on the basis of the same. Another argument has been advanced that the newly added section 31-A of the Customs Act, 1969 has changed the whole complexion whereby the concept of vested right under exemption granting Notification has been completely demolished. To advance it further it has been stated that even if after the words "Customs duty" used in the exemption granting Notification is held to include Regulatory duty even then by virtue of inclusion of section 31-A in the Customs Act, the regulatory duty being a separate levy would have to be paid by the petitioners and no vested right can be claimed. ' As far as the withdrawal of exemption in the payment of Sales Tax is concerned, learned counsel appearing for the respondents has argued that in view of section 21 of the General Clauses Act, the authority has got vast power to withdraw the same and there can be no estoppel in this regard against the respondents. ' We have considered the contention. We have noticed that earlier the regulatory duty was envisaged under section 2(a) of the Tariff Act, 1934 which was inserted through Finance Act, 1964 (Act V of 1964). Through Finance Act, 1975 (Act L of 75) Section 18 of the Customs Act was substituted and by this legislation, section 2(a) of the Traiff Act, 1934 was lifted and was formed as section 18(2) of the Customs Act, 1969. The Tariff Act, 1934 was also repealed under the Finance Act, 1975. Section 18(2) of the Customs Act was further substituted through Finance Act, 1994 (Act XII) of 1994) and the newly substituted section 18(2) of the Customs Act is as under: "(2) The Federal Government may, by notification in the official Gazette, levy, subject to such conditions, limitations, or restrictions as it may deem fit to impose a regulatory duty on all or any of the goods specified in the First Schedule at a rate not exceeding one hundred per cent. Of the value of such goods, as determined under section 25 or section 25-B and may, by a like notification, levy a regulatory duty on all or any of the goods, exported from Pakistan.-- (i) at a rate not exceeding one hundred per cent. Of the value of the goods as determined under section 25 or section 25-B, if such goods are specified in the Second Schedule; and
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(ii) at a rate not exceeding fifty per cent. Of the value of the goods as determined under section 25 or section 25-B, if such goods are not specified in the Second Schedule;" , ' It will be appropriate if at this juncture we also reproduce S.R.O. No,1050(I)/95, dated 29-10-1995 whereby regulatory duty has been imposed as well as Notification dated 4-4-1996 where under exemption in Sales Tax earlier accorded through different S.R.Os. Was withdrawn. ' Notification No, 1050(1)/95, dated 29-10-1995 is as under: "S.R.O. 1050(1)/95.---In exercise of the powers conferred by subsection (2) of section 18 of the Customs Act, 1969.(IV of 1969), the Federal Government is pleased to levy a further regulatory duty on imports of goods appearing in the First Schedule to, the said Act as detailed below:-- (i) the goods chargeable to a statutory or concessionary rate of zero per cent. Or sixty per cent. Statutory duty shall be charged a regulatory duty 5% ad valorem on import into Pakistan except the following namely:- (a) Wheat; (b) Fertilizer, (c) Power Generation plants for which letters of support have been issued by the Government up to 3,000 MW; (d) Import of accompanied and unaccompanied baggage; (e) Goods imported under diplomatic concessions; and (f) Newsprint imported by publishers of newspapers and periodicals subject to production of a certificate from Ministry of Information and Broadcasting; and (ii) the goods chargeable to a statutory or concessionary rate other than zero per cent, on the import into Pakistan shall be charged to a regulatory duty at the rate of ten per cent. Ad valorem except the following: (a) defence imports; (b) goods chargeable to duty at the rate of sixty five per cent. Ad valorem; and (c) the following P.O.L. Products:-- (d) regular super and premium class; (i) Motor spirit (ii) H.O.B.C.; (iii) M.T.B.E.; (iv) S.K.O.; (v) H.S.D.; (vi) L.D.O.; (vii) J.P.I.; (viii)J.P.4; (ix) Furnace oil; and (x) Asphalt ' This Notification shall have effect from the 29th day of October, 1995. ' It is apt to mention here that different notifications were issued on the 4th of April, 1996 whereby exemption granted in the payment of Sales Tax was withdrawn. For facility of reference one such notification issued on the 4th of April, 1996 is reproduced below: ' GOVERNMENT OF PAKISTAN ' MINISTRY OF FINANCE AND ECONOMIC AFFAIRS. ' Islamabad, the 4th April, 1996. NOTIFICATION (CUSTOMS) ' S.R.O. (I)/96.---In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969) and subsection (1) of section 18 of the Sales Tax Act, 1990 the Federal Government is pleased to direct that the following further amendments shall be made in this Ministry's Notification No, S.R.O. 24(1)/96, dated 8-1-1996, namely:- ' In the aforesaid Notification, in the preamble:-
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(1) the words, brackets, figures and comma "and subsection (1) of section 18 of the Sales Tax Act, 1990" shall be omitted; and (2) the words "and whole of sales tax" shall be omitted. 2. This Notification shall come into force from the 8th day of April, 1996. (Sd.) Riaz Ahmad Malik Additional Secretary." ' The reading of section 18(2) of the Act makes it very clear that the Federal Government is fully empowered subject to such conditions, limitations or restrictions as it may deem fit by issuing notification to impose regulatory duty on all or any of the specified goods in first schedule at a rate not exceeding 100% of the value of such goods as determined under section 25 or section 25-B of the Customs Act. This power is exercised so as to control the fluctuating prices trend in the international market, apart from generating extra funds/revenue for the State. It is to regulate the import and export of the items so as to maintain proper balance in the ever fluctuating international market. The word "regulate" has been defined in Black's Law Dictionary in the following terms: "To fix, establish, or control, to adjust by rules." In Chamber's dictionary it is defined as under:-"To control, to adopt or to adjust by rules. ' In Karachi Electric Supply Corporation Ltd. v. National Industrial Relations Commission and another PLD 1982 SC 113 it is held that "it is synonymous with the word "control" or "given". Accordingly, in ordinary parlance it implies the right to prescribe and enforce all such proper and reasonable rules as may be deemed necessary and wholesome in conducting an avocation in a proper and orderly manner." ' It is pertinent to mention here that the power to impose regulatory duty by the Federal Government under section 18(2) of the Customs Act has been conceded' by the superior Courts. In a case titled Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 it was held as under: "The levy was described as 'regulatory duty' as it was imposed to maintain a proper balance in fluctuating market as a result of sharp fall in the international process of iron and steel scrap and certain other iron and steel items with the result that the importers imported these materials at a much lower cost but regardless of it the prices did not fall to any substantial extent in the domestic market, and it were the importers only who were the beneficiaries and were earning windfall profits. Therefore, the discretion to levy "regulatory duty" was a device to enhance the rate of duty at any time during the course of the year so as to achieve a balance. The Legislature, in the circumstances could not know as to the details of the fluctuating international prices from time to time during course of the year and for that matter could not also be in a position to enhance the levy to obtain a balance of the prices in the domestic market nor was it in a position to speculate the details of the conditions, limitations or restrictions which were necessary to be imposed for the levy of 'regulatory duty'. It was in these circumstances that it provided the framework for the levy of ' regulatory duty' to be imposed and, gave the discretion to the Federal Government to make a levy so as to achieve a balance in the price in the local market." ' ' The aforesaid judgment was considered by the Supreme Court in case of M/s. Yousuf Rerolling Mills v. The Collector Customs and others PLD 1989 SC 232 wherein it was held that the discretion of the Federal Government given under section 18(2) is not untrammelled but is qualified with restraint according to the language of the subsection. The Judges held as under: "The discretion given in subsection (2) of section 18 of the Act had to be exercised within the legislative framework as observed by this Court in Abdur Rahim v. Federation of Pakistan PLD 1988 SC 670 at page 670. Here what is to noticed in the subsection is the exercise of the discretion within the legislative framework, that is, firstly, that the discretion to levy is subject to such conditions,
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limitations, or restrictions 'as the Federal Government may deem fit to impose, secondly, the specification of the articles by reference to the schedule and the maximum of the regulatory duty payable on the valuation of the articles as determined under section 25 and thirdly, that the imposition of the levy was for a limited period of a financial year unless the levy was earlier withdrawn." ' This demonstrates that the regulatory duty is imposed to deal with a special situation and was for a limited period as by virtue of subsection (4) of section 18 of the Act, it would stand automatically rescinded on the expiry of . The financial year in which it was issued if not rescinded earlier. As already stated the discretion is not unrestricted and there are certain inbuilt restrictions provided by subsection (2) of section 18 itself which control this discretion. It has to be exercised within the mandate provided by law. Reference is made to Chairman Regional Transport Authority Ltd. v. Pakistan Mutual Insurance Company PLD 1991 SC 14 where the learned Judge of the Supreme Court observed in the following terms: "Structuring discretion means regularizing it, organizing it, producing order in it, so that discretion will achieve a higher quality of justice. The seven instruments that are most useful in the structuring of discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents, and fair informal procedure...When legislative bodies delegate discretionary power without meaningful standards, administrators should develop standards at the earliest feasible time, the then, as circumstances permit, should further confine their own discretion through principles and rules. The movement from vague standards to definite standards to broad principles to rules may be accomplished by policy statements in any form, by adjudicatory opinions or by exercise of the rule-making power.... When legislative bodies delegate discretionary power without meaningful standards administrators should develop standards at the earlier feasible time, and then, as circumstances permit. Should further confine their own discretion through principles and rules." The nature of regulatory duty' has been considered to be essentially a "customs duty" and it is so covered by the expression "duties of the Customs". The argument of the learned counsel for the respondents that regulatory duty which is imposed under section 18, subsection (2) of the Act would not come within the purview of customs duty as envisaged under section 18(1) of the Act is devoid of any force. In this respect was are fortified from the observation made by the Hon'ble Supreme Court in Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 where it was held as under: ' The regulatory duty, has, therefore, direct nexus to the goods imported which are liable to customs charge. If one were to give to it its discretionary meaning then it nowhere in the context in which it occurs exerts that meaning. In essence, therefore, it can have no other sense, but that of a customs charge imposed to maintain a proper balance in a fluctuating market although it is described by a different nomenclature which does not make it distinct from customs duty. Subsection (3) of section 18 of the Act further reinforces the concept of its being an additional customs charge." ' Similarly in Gadoon Textile Mills Ltd. v. Assistant Collector and others PLD 1992 Pesh. 191 it was held as under: "Such being the case, we have no hesitation in holding, qua part (a) of question posed in para. 9 (supra), that regulatory duty falls within the expression ' duty of the customs' which in its pith and substance is not different at all from what is commonly called customs duty and that section 19(1) of the Customs Act, 1969 shall accordingly apply equally to subsection (2) of section 18 (ibid) as well." ' This view of the Peshawar Division Bench quoted above was approved by the Hon'ble Supreme Court where the leave against the same was refused Vide No,99-P/1992 and subsequently while dismissing the Civil Review Petition No, 35 of 1993 reported in The Assistant Collector Customs,
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Central Excise and Sales Tax, Mardan Division, Mardan and 2 others v. M/s. Godoon Textile Mills, Ltd. Swabi through General Manager (Operation) 1994 SCMR 712 where it was held as under: "The careful perusal of section 18 above makes it clear that customs duties are imposed under subsection (2). Subsection (3) thereof clarifies that regulatory duty levelled under subsection (2) shall be in addition to any duty levied under subsection (1) or any other law for the time being in force and be levied on and from the date specified in the notification. According to subsection (4) any notification issued under subsection (2) shall if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued. Section 19 confers wide powers on the Government to exempt any goods from the whole or any part of the customs duty chargeable thereon." ' It was further observed that:--- "In this background of the situation, the only interpretation which can be put on the notification is the total exemption from the whole of customs duties and sales, tax and not only those mentioned in section 18(1) of the Customs Act. As held by this Court in the cited judgment referred to above, the regulatory duty is an additional customs charge leviable under the various sections of the Customs Act and it may look unreasonable if customs duty leviable under subsection (1) of section 18 is declared exempted whereas the additional customs charge in the form of regulatory duty is held recoverable. The words used in the notification ' whole' and 'leviable' suggested that the said industrial estate was exempted from all customs duties leviable in past or in future." A reference may also be made to Messrs Khyber Agro (Pvt) Limited v. Assistant Collector Customs, Central Excise and Sales Tax, Mardan Division, Mardan and 2 others 1995 CLC 1853 where it was held as under: "The perusal of the mentioned judgment of this Court revealed that it was held therein that the regulatory duty is essentially customs duty and the Supreme Court agreed with this interpretation. We, therefore, while relying on the said decision accept these writ petitions only to the extent that the petitioners are not liable to pay the regulatory duty from the date of enforcement of the exemption granting Notification No,517(1)/89, dated 3-6-1989, till the date this notification was rescinded and that the respondents are not legally competent to demand regulatory duty from the petitioners during the said period and was also declare that. The respondents are liable to refund whatever amount they have received on this count from the petitioners." This amply demonstrates that by calling it a regulatory duty, it would remain to be a customs duty in pith and substances as made applicable under section 18(1) of the Customs Act, exemption whereof can be granted under section 19 of the Customs Act, 1969. ' In the impugned Notification qua the imposition of regulatory duty the respondents have used the word "Import" of the items. The word "Import" has been defined to mean bringing into the country. In Pakistan Textiles Mill Owners Association, Karachi and two others v. Administrator of Karachi and'two others PLD 1963 SC 137 it was held as under:--- ' Import' and 'export' in their ordinary and natural sense mean to bring into or to take out of or away from a particular place. The introduction of the notion that there must also necessarily be a mixing up in mass with other goods within those limits seems to us to impose an unjustifiable restriction upon the meaning of the word 'Import'. In a taxing statute, as in any other statute, we see no reason to depart from the general rule that words used in a statute must first be given their ordinary and natural meaning. It is only when such an ordinary meaning does not make sense that resort can be made to discovering other appropriate meanings. In the present case no such difficulty is created by giving the words 'Import' and 'export' their ordinary and natural meaning." ' Similarly in East and West Steamship Co. v. The Collector of Customs and others PLD 1976 SC 618 it was held as under:
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"The word 'Import' carries the natural meaning of "bringing in" and has no technical moaning. Mr. A.K. Brohi construed the word 'Import' as entailing the entire process of filing Bill of Entry, discharging from the vessel at a wharf, assessment of value of the goods and the duty payable on them. We, however, see no warrant for placing this artificial meaning or the word 'import'. In Black's Law Dictionary. ' importation' is defined as "The act of bringing goods and merchandise into a country from a foreign country and ' imported' in general, has the same meaning in the Tariff Laws that its etymology shows, in proto, to carry in. To ' import' is to bear or carry into. As imported article is one brought or carried into a country from abroad. In Wharton's Law Lexicon 'import' is given the meaning goods or produce brought into a country from abroad." ' It has been held in The Lahore Textile and General Mills Ltd. v. The Collector of Customs, Lahore and 2 others PLD 1988 Lah. 563 that if on the day the good reached the territorial water of the Custom port of Pakistan no customs duty or surcharge is leviable, or if any duty or surcharge is leviable but the same stands totally exempted, goods would not be chargeable to duty or surcharge. As far as the argument of the learned counsel for the petitioners that they have prior to the promultation/imposition of regulatory duty entered into various contracts with foreign manufacturers and opened the L. Cs. Would not be of any assistance to them. It has been held in Messrs Qaiser Brothers (Pvt.) Limited v. Government of Pakistan and others PLD 1991 SC 884 as under: "It may be pointed out that. When the Government issues an import licence for the import of certain goods, it does not make any representation that it would not levy any new customs duty or would not increase its rate. In fact there is no nexus between issuance of an import licence and levy of a new customs duty or increase in its rate. Section 39 of the Act provides the mechanism for determining the value of the imported goods and the rate of customs duty. It is not the case of the petitioners that the respondents are not determining the amount of the customs duty in terms of the above section. We may also observe that levy of new customs duty or increase in its rate is normal incident of a business transaction." ' The learned Judges further observed as under: "It may further be observed that levy of regulatory duty not only regulates the price structure of the time concerned. But it also generates additional fund for the public purpose. To put constraint upon the exercise of the power contained in subsection (2) of section 18 of the Act of nature sought to be pressed into service by the petitioner will not be in the interest of the public. This Court already in the case of Messrs Sh. Abdur Rahim, Allah Ditta v. Federation of Pakistan and others PLD 1988 SC 670 has examined the vires of the regulatory…
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