ORDER TASSADUQ HUSSAIN JILANI.- This order shall dispose of Custom Appeals Nos. 19 and 20 of 2004 as the appellant and goods, subject-matter of these appeals, are similar. Through these appeals, appellants have challenged the concurrent orders/judgments passed by the Tribunals below i.e. Dated 27.1.2003 passed by the Collector of Customs, Excise & Sales Tax (Adjudication), Customs House, Lahore and the learned Appellate Tribunal Customs, Central Excise and Sales Tax, Lahore dated 25.8.2003 vide which the afore referred order was affirmed in appeal.
2. Facts in brief are that the appellants imported goods subject-matter of these appeals and got rebate from payment of customs duties and other taxes on the basis of exemption certificate issued under sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 read with clauses (iv) and (vi) of SRO 593(1 )/91, dated 30.6.1991 (issued by the Income Tax Department). On a report from the Directorate of Intelligence & Investigation (Customs & Excise), Central Region, Lahore to the effect that the appellants had imported goods to be sold in market and not machinery/plant/fixture/fittings or any other equipment for the purposes of setting up an industrial undertaking for which purpose the certificate had been issued under the afore-referred provisions of the Income Tax Ordinance, 1979, the Commissioner Income Tax Zone- C, Lahore cancelled the exemption certificate vide order dated 11.1.2002 whereafter a show-cause notice was issued by the Collector of Customs, Excise & Sales Tax (Adjudication), Customs House, Lahore alleging as under:-
(i) That the appellant had availed the benefit of exemption from payment of income tax by producing fraudulently obtained exemption certificate that they fulfilled requirements under sub- section (5) of Section 50 of the Income Tax Ordinance, 1979 reap with clauses (iv) and (vi) of SRO 03411/91, dated 30.6.1991;
(ii) That the exemption certificate issued in terms of sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 had been cancelled but despite that appellants availed the exemption; (i.e) That only a manufacturer was entitled to exemption and they, on their on showing, were registered as commercial importer/exporter under Sales Tax Registration NO. 03-99-9999-023-55, dated 31.7.2001, therefore, they could not avail the benefit of the exemption in view of sub-section
(5) of Section 50 of the Income Tax Ordinance, 1979 read with clauses (iv) and (vi) of SRO 593(1 )/91, dated 30.6.1991.
3. The Collector of Customs, Excise & Sales Tax (Adjudication), Customs House, Lahore, vide Order- in- Original dated 27.1.2003, held as under:- "18. In the instant case the certificate have been issued to M/s. Best Buy Computers, Suit 2, 2nd Floor, A!-Hafiz Centre, Gulberg-III, Lahore for the import of materials/computer parts. The computer parts and materials cannot be used for setting up an industrial undertaking nor they can be installed in such undertaking. The computer parts are used only for the manufacture or assembling of computers, which by no stretch of imagination is an industrial undertaking. Further, the computer parts are neither plant, machinery, fixtures, fittings nor any equipment mentioned in clause (iv) of the said SRO. Thus, M/s. Best Buy Computers, Suite No. 2, 2nd Floor, Al- Hafiz Centre, Gulberg-III, Lahore fall outside the scope of class of persons mentioned in the SR. No. IV of SRO 593(1 )/91, dated 30.6.1991. The exemption of advance income tax invalid by M/s. Best Buy Computers, Suite No. 2, 2nd Floor, Al-Hafiz Centre, Gulberg-III, Lahore against exemption certificate No. J/210, dated 8.8.2001 is not in accordance with the provisions of the SRO 593(1 )/91, dated 30.6.2001.
19. In view of the above M/s. Best Buy Computers, Suite No. 2, 2nd Floor, Al-Hafiz Centre, Gulberg-III, Lahore are directed to pay Rs. 22,49,797/- (Rupees twenty two lacs forty-nine thousand seven hundred and ninety- seven) as income tax forthwith. A penalty of Rs. 8,00,000/- (Rupees eight lacs only) is also imposed on M/s. Best Buy Computers, Suite No. 2, 2nd Floor, Al-Hafiz Centre, Gulberg-III, Lahore for violation of sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 read with clauses (iv) and (vi) of SRO 593(1 )/91, dated 30.6.1991."
4. This order was affirmed by the Customs, Excise & Sales Tax Appellate Tribunal, Lahore vide judgment dated 25.8.2003 and appellant's appeal was dismissed. However, the learned Appellate Tribunal remitted the imposition of penalty of Rs. 8,00,000/- and Rs. 32,00,000/- as it was found to be un-warranted in law.
5. Learned counsel for the appellant, in support of these appeals, submitted as under:--
(i) That both the Tribunals below have passed the impugned orders/judgments on grounds which were beyond the scope of the show-cause notice;
(ii) That in disproof of the allegations, evidence was led before the Tribunals but the same has not been considered; (i.e) That the exemption certificate was cancelled on 11.1.2002 and all the bills of entries concerning the goods in question were cleared before the said date. That being so the appellants did not violate any provision of law and the benefit of exemption was rightly given to them.
(iv) That respondents Nos. 2 and 3 had no jurisdiction to recover income-tax and it was only the Commissioner Income Tax which could initiate any proceedings, if otherwise, warranted in law.
6. We have heard learned counsel for the appellants and have gone through the impugned orders/judgments and the documents annexed with the appeals.
7. In their application addressed to Commissioner Income Tax Zone-C, Lahore, the appellants, while seeking exemption under sub-section (5) of Section 50 of the Income Tax Ordinance, 1979, stated that they were in the business of "assembling of computers"; whereupon the appellant was issued exemption certificate dated 8.8.2001, which is available at page 32 of the appeal which reads as under:-- "Certified that M/s. Best Buy Computers, Lahore NTN 21-06-1275112-0 fulfil the requirements under sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 read with clause (IV of Board's SRO 593(1 )/91, dated 30.6.1991 and is exempt from operation of sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 for import of material/computer parts as per Annex-I for its on use in manufacturing. (emphasis supplied).
This certificate is valid up to 30.6.2002 unless earlier cancelled. Tax already deducted before the issuance of this certificate will not be refunded to the assessee but deposited in Govt. Treasury."
Sub-section (5) of Section 50 of the Income Tax Ordinance, 1979 empowers the Collector Customs to collect-tax. It stipulates as under:- "(5) Notwithstanding anything contained in any law for the time being in forcer-
(a) the Collector of Customs shall in the case of every importer of goods, collect advance tax computed, on the basis of the value of such goods as increased by the Customs duty and Sales- tax if any levied thereon, at the rates specified in the First Schedule, and credit for the tax so collected in any financial year shall, subject to the provisions of Section 53, be given in computing the tax payable by such importer for the assessment year commencing on the first day of July next following the said financial year, or in the case of an assessee to whom Section 72 or Section 81 applies, the assessm ent year, in which the "said date", as referred to therein, falls, whichever is the later; and
(b) the tax under clause(a) shall be collected in the same manner and at the same time as the customs duty, as if such goods (even though exempt from such duty) were liable to such duty, and all the provisions of the Customs Act, 1969 (IV of 1969) shall so far as may be, apply accordingly: Provided that in the case of a manufacturer importing raw materials other than edible oils exclusively for its on use, the Regional Commissioner of Income Tax may certify reduction of the rate of collection under this sub-section, up to one hundred present, if the aggregate of tax paid or collected during that year equals the amount of tax paid by such assess in the immediately preceding year and the certificate is not issued during the first year of assessee business: Provided further that the provisions of this sub-section shall not apply to~
(i) any person re-importing re-usable containers for re-export qualifying for customs and sales tax exemption on temporary import under Customs Notification No. SRO 344(1 )/95, dated 25th April, 1995; or
(ii) any person importing the following petroleum products, namely:- Motor Spirit (MS), Furnace Oil (FO, JP-1 and MTBE: Provided also that if at any stage it is known that the provisions of this proviso have been misused, such person shall be treated as an assessee in default in respect of such tax and be treated accordingly."
Clause (IV of SRO 593(1 )/91, dated 30.6.1991, to which reference has been made above, reads as under:- "(iv) Persons who import plant, machinery, fixtures, fittings or any other equipment for the purposes of setting up an industrial undertaking (including hotels) approved by the Federal Government in respect of such plant, machinery, fixtures, fitting, or any other equipment."
8. A bare reading of the various provisions of law and the rules framed thereunder, referred to in the preceding paragraphs, would indicate that the exemption which the appellants availed on goods subject-matter of these appeals was available only to these importers who import goods for its use in manufacturing, In the exemption certificates, itself, issued to the appellants, it was specifically mentioned that he appellants' fulfil the requirements in terms of relevant provisions of law.
9. In the entire body of the appeals, appellants have not taken up the point that the goods subject- matter of these appeals were to be used in some manufacturing project of the appellants or that they were for their on factory use. Thus, the concurrent findings qua this factual aspect remained uncontroverted. The Commissioner Income Tax Zone-C, Lahore, vide order dated 11.1.2002, cancelled the exemption certificates as it was of the view that the exemption certificate had wrongly been issued to the appellants. Admittedly, this order of cancellation was never challenged by the appellants which further adversely reflects on the bona tides of appellants' claim before this Court, It also confirms the view that the exemption certificate was wrongly issued and the exemption granted from the tax was unwarranted. The appellants do not deny that the exemption certificates have been issued in terms of clause (iv) of SRO 593(1 )/91, dated 30.6.1991 but according to him the afore-referred clause had wrongly been mentioned and the Commissioner Income Tax Zone-C, Lahore wanted to mention clause (vi) which extends similar concession to commercial importers. We have gone through clause (vi) to which reference has been made above. The benefit under this clause can only be extended to those commercial importers who produces a certificate from the Commissioner Income Tax to the effect that:-
(a) their income during the income year is exempt from tax under the Second Schedule to the Ordinance;
(b) their income during the income year is not likely to be chargeable to tax; or
(c) no tax is likely to be payable by them on their income during the income year on account of any brought forward loss, depreciation allowance or tax credit.
10. Nothing is on record to indicate that this certificate was ever issued by the Commissioner Income Tax or that it was produced before either the competent authorities or the Tribunals below.
Even the certificates issued in appellants' favour do not indicate that appellants fall within the afore-referred category. Even otherwise, if the appellants' were of the view that clause (vi) had wrongly been mentioned in the exemption certificate issued by the Commissioner Income Tax, there was nothing to prevent him to seek necessary amendment or a clarification. The argument of appellants' learned counsel that the Tribunals below have gone beyond the scope of show-cause notice is against the record. A bare reading of the impugned judgments/orders would indicate that the grounds which found favour with them to dismiss appellants' case and their appeals are germane to the show-cause notice which is at page 36 of these appeals.
11. For what has been discussed above, we do not find the concurrent judgments/orders to be illegal, reflecting any jurisdictional defect or against the weight of material brought on record. No question of law has been raised. Both the Customs Appeals Nos. 19 and 20 of 2004 are hereby dismissed in limine, being not maintainable.