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Petitioner: MESERs STERLING ENGINEERING CORPORATION VS Respondent: THE COLLECTOR OF JUDGMENT
Court Name: Sindh High Court Judge(s): Ajmal Mian, k.A Ghani, B. G. N. Kazi Title:MESERs STERLING ENGINEERING CORPORATION vs THE COLLECTOR OF
JUDGMENT
Reported As: PLD 1986 Karachi 211 Result: Reference answered Judgment JUDGMENT ' B. G. N. KAZI, J.-This full Bench was constituted to resolve the conflict of decisions in Constitutional Petition No, 1178 of 1975 (reported in PLD 1977 Kar. 911) and Constitutional Petition No, 404 of 1977 given by the Division Benches of this Court in respect of interpretation of section 18 (2) of the Customs Act, 1969 (Act No, IV of 1969) (hereinafter referred to as the Act). ' At the very outset it is observed that the decision of Division Bench in Messrs Yousuf Re-rolling Mills, Karachi v. Collector of Customs, Karachi and another (I) which was given earlier was not brought to the notice of Division Bench deciding Constitutional Petition No, 404 of 1977 as there is nothing in the order, dated 8-8-1977 dismissing the petition in limine about the earlier decision which also was fo!Lowed in decisions of Constitutional Petitions Nos. 1116 and 1117 of 1978 by other Division Benches, (1) PLD 1977 Kw. 911 ' The decision in Messrs Yousuf Re-rolling Mills, Karachi was in respect of Constitutional Petitions Nos. 1178, 1179, 1180, 1265, 1266, 1278, 1315 and 1327 of 1975 which were heard and dealt with together as common question of law was involved in all the aforesaid petitions. ' The question of law involved is whether under subsection (2) of section 18 of the Act the Federal Government could impose a regulatory duty at a rate exceeding 50% of the rate if any specified in the schedule and further whether under the aforesaid provision of law the Federal Government had the option to levy regulatory duty as aforesaid or at a rate not exceeding ;00% of the value of such articles as determined under section 25 of the Act. It. Was the contention on behalf of the importers
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that it is only when no rate of duty is shown in the schedule against the item that rate of duty not exceeding 100% of the value of such item as determined under section 25 of the Act, could be imposed as regulatory duty and in all other cases in which the rates of duty have been shown in the First Schedule to the Act the regulatory duty levied could not exceed 50% of the rate so indicated in the schedule. ' Before dealing with the interpretation of the provisions of subsection (2) of section 18 of the Act the scope of such interpretation may well be considered. Maxwell in his Interpretation of Statutes, 12th Edition, at page 208 observes as under : - "A sense of the possible injustice of an interpretation ought not to induce Judges to do violence to well-settled rules of construction but it may properly lead to the selection of one rather than the other of two reasonable interpretations. Whenever the language4 of the Legislature admits of two constructions and, if construed in one way, would lead to obvious injustice, the Courts act upon the view that such a result could not have been intended, unless the intention to bring it about has been manifested in plain words." ' Section 18 of the Act reads as under :- "18. Goods dutiable :-(1) Except as hereinafter provided, customs-duties shall be levied at such rates as are prescribed in the First Schedule and the Second Schedule or under any other law for the time being in force on- (a) goods imported into or exported from Pakistan ; (b) goods brought from any foreign country to any customs-station, and without payment of duty, there transhipped or transported for, or thence carried to and, imported at any other customs- station ; and (c) goods brought in bond from one customs station to another. (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 articles specified in the First Schedule at a rate not exceeding fifty per cent of the rate, if any, specified therein read with any notification issued under subsection (1) of section 2 or subsection (1) of section 3 or the Protective Duties, Act, 1950 (LXI of 1950), or at a rate not exceeding hundred per cent of the value of such articles, as determined under section 25 and may, be a like notification, levy a regulatory duty on all or any of the articles exported from Pakistan- (i) in the case of articles enumerated in -the Second Schedule at a rate not exceeding thirty per cent of the rate specified in the Second Schedule or of the amount which would represent the value of such articles as determined under section 25 ; and (ii) in the case of articles not enumerated in the Second Schedule, at a rate not exceeding thirty per cent of the amount which re- presents the value of such articles as determined under section 25. (3) The regulatory duty levied under subsection (2) shall- (a) be in addition to any duty imposed under subsection (1) or under any other law for the time being in force, and (b) be leviable on and from the day specified in the notification issued under that subsection, notwithstanding the fact that the issue of the Official Gazette in which such notification appears is published at any time after that day. (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." The section as reproduced above was substituted by the Finance Act, 1975. Subsection (1) lays down that the customs duties shall be levie at such rates as are prescribed the First Schedule and the Second Schedule or under any other law for the time being in force. However, subsection also is to the effect that the levy of customs duties would be as stated "except as hereinafter provided". Thus the general rule laid down in subection (1) can be changed when there is such indication in
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the subsequent provisions of the Act which under subsection (2) provides that the Federal Government is empowered to levy and impose a regulatory duty on all or any of the articles specified in the First Schedule. In the first part of subsection (2) aforesaid, it has no doubt been provided that the rate could not exceed 50% of the rate, if any, specified in the Schedule but the power to impose the regulatory duty does not stop there and the words "read with any notification issued under subsection (1) of section 2 or subsection (1) of section 3 of the Protective Duties Act, 1950 (LXI of 1950)" have to be considered as further authorising the Federal Government to act in fixing the regulatory duty over and above 50% of the rate specified in the Schedule. This is made clear in subsection (3) which provides as under :- "(3) The regulatory duty levied under subsection (2) shall- (al be in addition to any duty imposed under subsection (1) or under any other law for the time being in force ; and (b) be leviable on and from the day specified in the notification issued under that subsection, notwithstanding the fact that the issue of the Official Gazette in which such notification appears is published at any time after that day" ' It may here be observed that imposition of protective duty under subsection (1) to section 2 and subsection (1) to section 3 of the Protective Duties Act, 1950 does not envisage any limit on the powers of the Central Government with regard to imposition of protective duty. Section 3(11 of the Protective Duties Act, 19.0 Vier alia permits that if on an inquiry the duty imposed under subsection (1) of section 2 is found to be too low to provide adequate protection to the industrial concerned in Pakistan, the Central Government may by notification in the Official Gazette raise the duty to such extent and for such period (which may be extended from time to time but not more than 3 years at one time) as it thinks fit. ' With regard to the two parts of subsection (2) of section 18 of the Act since the word "or" has been used, it is quite clear that the levy of regulatory duty on all or any of the articles specified in the First Schedule shall be under part 1 or under part 2 at the discretion of the Federal Government. For the reasons given above, With respect, the view adopted by the Division Bench deciding Constitutional Petition No, 404 of 1977 tha since the words "such articles''. Occur in both the parts of subsection (2), the same cover all the articles mentioned in the Schedule whether the rates of regulatory duty are specified in the First Schedule or not, in our opinion is the correct view. If the contention that part 2 of subsection (2) of section 18 applies only in respect of items on the free list is accepted the very object of imposing regulatory duty would be nullified. The object of the Legislature in providing for imposing of regulatory duty is undoubtedly to afford protection to local manufacturing industries against the foreign imports. The first part of subsection (2) aforesaid provides for imposition of regulatory duty on all or any of the articles specified in the First Schedule at rate not exceeding 50% of the rate, if any, specified therein read with any notification issued under subsection (1) of section 2 or subsection (1) of section 3 of the Protective Duties Act, 1950. The aforesaid Act as the very title shows was enacted, enabling the Central Government to impose protective duties of customs on goods produced or manufactured outside Pakistan and imported into Pakistan where such imposition is urgently necessary in the interest of industries established in Pakistan. There is no limit to the imposition of duties of customs in the circumstances stated and the rates of protective duties could be altered as provided by section 3 of the aforesaid Act. The Protective Duties Act, 1950 was repealed by the Federal Law (Revision and Declaration) Ordinance, 198!, as law which had become unnecessary. It is apparent from the wording of subsection (2) of section 18 of the Act that the reference to the provisions of the Protective Duties Act, 1950 still remains intact and is protected by the saving clause in section 7 of the repealing Ordinance of 1981. ' A perusal of Division Bench decision in Messrs Yousuf Re-rolling Mills Karachi v. Collector of Customs and another indicates that while considering part 1 of subsection (2) of section 18 of the
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Act the words "read with any notification issued under subsection (1) of section 2 or subsection (I) of section 3 of the Protective Duties Act, 1950 (LXI)" were not taken into consideration. This is also apparent from the observations which read as under :- "However, in respect of the articles on which the customs duty has been levied on ad valorem basis if regulatory duty is allowed to be imposed at the option of the Federal Government either under the first part or under the second part as claimed by the Deputy Attorney-General, it would lead to not only anomalous results but would also bring the levy of the duty under first part into conflict with the levy of duty under the second part as would be presently seen. Under the first part the regulatory duty in respect of the present articles i. e. Iron and steel scrap on which the customs duty is levied at 25 per cent. Ad valorem could be up to 12} per cent. Ad valorem but if it is accepted that in respect of these very articles the regulatory duty could also be levied under the second part then it could be levied upto 100 per cent ad valorem as provided therein. This would bring the levy directly in conflict with the provisions of the first part which prohibit the levy of regulatory duty exceeding 50 per cent of the rate of customs duty, if any, provided in the First Schedule. Therefore, it could not be the intention of the Legislature to permit to do under the second part what it has prohibited to be done under the first part." ' With respect, in the observations quoted above the power of the Federal Government to impose protective duty by issue of notifications has been overlooked and the rate not exceeding 50% of the rate specified in the Schedule, under subsection (2) of section 18 aforesaid is to be read with notification issued with regard to protective duty and the Federal Government has been given the discretion to act under part 1 or part 2 of the aforesaid subsection. The discretion to act either in accordance with part 1 or in accordance with part 2 is apparent from the very use of the word "or" in the subsection as already stated. We would, therefore, support the decision of Division Bench in Constitutional Petition No, 404 of 1977 and with respect do not support the view taken by the Division Bench in the case of Messrs Yousuf Re-rolling Mills, Karachi. ' Due to the conflict of decisions which has been referred to above a number of writ petitions in which the same legal point was involved have been adjourned from time to time as petitions conneceded with the instant petition. Since each such petition has different set of facts and even the point of law involved may not be the same as in the instant petition, after this decision resolving the conflict of opinion, it will be for the Benches concerned to dispose of each of the petitions. ' Reverting to the facts of the instant petition for the reasons given above the demand of import duty at the rate of 72i% on the basis of notification, dated 1-7-1976 published in the Gazette of Pakistan Extraordinary, Part II; dated 1-7-1976 bearing S. R. 0. No, 635 (1)/ 6 issued by respondent No, 2. Is legal and valid. The petition is, therefore, dismissed however, with no order as to costs. ' K. A. GHANI, J.-I have the benefit of reading the judgment of our brother Mr. Justice B. G. N. Kazi, on the question referred to the Full Court in view of the conflict of opinion between the two learned Division Benches of this Court on the interpretation of subsection (2) of section 18 of the Customs Act, 1969 (hereinafter referred as the said Act). I would like to give reasons of my own for arriving at the conclusion reached in the above judgment. 2. At the very outset, it may be stated that a perusal of subsection (2) of section 18 would show that the provisions thereof can conveniently be described as consisting of the following two parts, pursuant to which the Federal Government is empowered to levy a regulatory duty :- a(i) on all or any of the articles specified in the First Schedule at a rate not exceeding fifty per cent of the rate, if any, specified therein." (ii) "......Or at a rate not exceeding hundred per cent of the value of such articles as determined under section 25." (Underlines* are by me).
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3. In the first case of Yousuf Re-rolling Mills v. Collector of Customs, decided on 19-4-1977 while interpreting the said subsection (2), and power of the Federal Government, to impose a regulatory duty it was held that in respect of those articles on which rate of customs duty has been provided on ad valorem basis, the regulator) duty could be levied only under the first part and it the intention of the Legislature could be to prohibit the levying of duty exceeding 100 per cent under the second part what it has permitted to be done under the first part." 4. In the other case Mes rs Hashim Tanvir Traders v. Federation of Pakistan and others C. P. No, 404 of 1977 another learned Division Bench while interpreting subsection (2) of section 18, and repelling the contention raised that since the rate in respect of the item involved in that case was specified in the First Schedule to the Customs Act. 1969, the Federal Government had no power to levy regulatory duty beyond the said percentage and that second part of the aforesaid subsection empowering the Federal Government to impose duty at a rate not exceeding 100 per cent of the value of such articles as determined under section 25 was not attracted and the two parts of this section be read disjunctively, held :- "The aforesaid subsection (2) of section 18 of the said Act empowers the Federal Government to impose regulatory duty either at a rate not exceeding 50% of the rate specified in the First Schedule or at a rate not exceeding 100% of the value of such articles, as determined under section 25 of the said Act. The power to impose regulatory duty covers all or any of the articles mentioned in the Schedule. In the first part of the subsection (2) of the said Act the imposition of regulatory duty on all or any of the articles specified in the First Schedule is to be at a rate not exceeding 50% of the rate, whereas in the second part of the subsection (2) it is to be at a rate not exceeding 100% of the value of such articles, as determined under section 25 of the said Act. The words 'such articles' occuring in the two parts of the subsection (2) clearly cover all the articles mentioned in the schedule whether their rates are specified therein or not." ' It was further held : "The object behind the. Imposition of the regulatory duty is to afford protection to local manufacturing industries against foreign imports and if the imposition of the regulatory duty at the rate of 50% of the rate mentioned in the First Schedule is found inadequate qua prevalent market value of the goods, the Federal Government have a free choice to impose such regulatory duty but not exceeding 100% of the value of such articles as determined under section 25 of the said Act." 5. In view of the conflict between the judgments of the two learned Division Benches of this Court referred above the question of law which requires decision by the Full Court is whether under second part of sub-section (2) of section 18 of the Act, the Federal Government is empowered to impose a regulatory duty at a rate not exceeding 100% of the value of such articles as determined under section 25 of the Act, on all or any of the articles specified in the First Schedule on which regulatory duty at a rate not exceeding fifty per cent of the rate, if any, specified therein could be imposed under the first part of the said subsection (2). 6. It was contended by the learned Advocates on behalf of the importers that it is only when no rate of duty is specified in the First Schedule against the item, duty at a rate not exceeding 100% of the value of such item as determined under section 25 of the Act could he imposed and that in all other cases in which the rates of duty have been specified in the First Schedule the regulatory duty levied could not exceed 50% of the rate so indicated in the said First Schedule. According to the learned counsel for the petitioner any other interpretation would involve conflict in the first part and second part of subsection (2) of section 18 and would be a cause of great hardship, to the importers. Reliance was placed on the case of Yousuf Re-Rolling Mills V. Colector of Customi (ibid). ' On the other hand Mr. A. Aziz Munshi, the learned Deputy Attorney-General relied upon the case of Messrs Hashim Tanvir Traders v. Federation of Pakistan and others referred above. It was argued that the Federal Government has a choice to impose regulatory duty either under the first part of
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subsection. (2) at the rate of 50% of the rates mentioned in the First Schedule or to impose a regulatory duty but not exceeding 100% of the value of such articles as determined under section 25 of the said Act. 7. I, however, find myself unable to accept the interpretation which the learned Advocates for the importers seek to place on subsection (2) of section 18. It would be relevant here to state that while construing and interpreting fiscal laws one must look to the words of the statute and interpret l0 them in the light of what is clearly expressed and nothing can be implied which is not expressed. The Hon'ble Supreme Court of Pakistan laid down principles of interpretation of the provisions of taxing statutes, relevant would it be to refer to them for purposes of resolving the question involved in this petition :- (i) In the case of Commissioner of Agricultural Income-tax v. B. W. M. Abdur Rehman (1) the Honourable Supreme Court held : - "But indeed, in determining whether or not a particular matter comes within a taxing statute, it is only the letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within the letter of the law, he must be taxed, however, great a hardship may thereby be involved but on the other hand if the Crown cannot bring the subject within the letter of the law he is free, however, apparent it may be that his case is within what might be called the spirit of the Law. As was said by Rowlatt, J., in Cap Brandy Syndicate v. Inland Revenue Commissioner (1921) 1 K B 64. "In a Taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about (1) 1973 SCM R 445 tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." ' In Tenant v. Smith (1) Lord Halsbury said :- "In a Taxing Act it is Impossible, I believe to assume any intention any governing purpose in the Act, to do more than take such tax as the statute imposes cases, therefore, under the Taxes Acts always resolve themselves into the question whether or not the words of the Act have reached the alleged subject of Taxation." ' In the light of these pronouncements with which I hereby express my respectful agreement, it is clear that it is not possible to look either to the amending statute of 1951 or to the alleged collection allowance said to be included in the scheme of the case, in order to determibe whether the words in clause (7) of section 6 provide for an allowance to be made in respect of the amount of cess received by the assessee. That question must be decided solely on a consideration of the very words of the clause, although in interpreting those words it is premissible to look generally at the rest of the statute, and in particular to consider whether the words in question have been used elsewhere and if so in what sense." (ii) In the case of Collector of Customs (Appraisement), Karachi and others v. Messrs Abdul Majeed Khan and others (2), the principles as to interpretation of taxing statutes were declared as follows :- "Moreover, in interpreting a penal or a taxing statute the Courts must look to the words of the statute and interpret them in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency, as held in Messrs Hirjina & Co. (Pakistan) Ltd. v. Commissioner of Sales Tax, Ce stral, Karachi." ' In the abovementioned case the Honourable Supreme Court cited with approval from the case of Two Hundred Chests of Tea (U S 6 Lawyer's Edn. 430) the following observations as quite instructive :-
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"The object of the duty laws is to raise revenue, and for this purpose to class substance according to the general usage and known determinations of trade. Whether a particular article were designated by one name or another, in the country of its origin, or whether it were a simple or mixed substance, was of no importance in the view of the Legislature. I did not suppose our merchants to be naturalists or geologists or botanists. It applied its attention to the description of articles, as they derived their appraisements in our own markets, in our domestic as well as our foreign traffic. And it would have been as dangerous as useless, to attempt any other classification than that derived from the actual business of human life." (iii) In the case of F. B. Ali v. The State (3) it was held :- "It is first sought to be contended that the Ordinance were not law at all, because, they purported to unreasonably deprive a citizen of even the norms of a judicial trial. But this generalization cannot be accepted. Law has not been defined in the Constitution of (1) 1982 A C 150 (2) 1977 SCM R 371 (3) PLD 1975 SC 506 1962 and, therefore, in its generally accepted connotation, it means positive law, that is to say, a formal pronouncement of the will of a competent law-giver. There is no such condition that a law must in order to qualify as a law also be based on reason or morality. The Courts cannot strike down a law on any such higher ethical notions nor can Courts act on the basis of philosophical concepts of law as pointed by me in the case of Asma Mani (PLD 1972 SC.139)." (iv) In the case of Muhammad Amir Khan v. The Controller of Estate Duty and others (1) while pointing out the distinction between the provisions which imposed taxes and those which provided for the machinery by which tax is assessed and realised, the Hon'ble Court observed :- "The provisions relating to imposition of tax are to be strictly construed in favour…
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