ZAHID KURBAN ALAVI, J.---By a short order, dated 1-2-2002 we had allowed this and the connected Constitution petitions bearing C.P. Nos. D-2180/94, 2181 of 1994, 2182 of 1994, 2183 of 1994, 2184 of 1994, 2185 of 1994, 2186 of 1994 and 2187 of 1994 and the following are the reasons.
2. The petitioner is a public limited company and deals with textile and yarn. By a notification, dated 11-7-1990, issued under section 19 of the Customs Act, 1969, the Federal Government was pleased to exempt cotton yarn manufactured on machine, commonly known as "open-end rotors" and wound on cheese from whole of the customs duty chargeable thereon under Second Schedule to the said Act subject to the following conditions:--
(1) the export is made directly from the manufacturing unit under Rule 13 of the Central Excise Rules; and
(ii) total quantity of export in case of each manufacturing unit, in a quarter, does not exceed 50% of the quantity manufactured by the said unit in the previous quarter.
3. It is the contention of the petitioner that the notification, dated 11-7-1990 making distinction between the yarn produced in different machines and only on the basis of its method of final wrapping is discriminatory and without lawful authority and of no legal effect and section 19 of the Act, 1969 only empowers the respondents, to grant exemption from customs duty subject to any restriction and limitation on any goods liable to duty. That imposition of penalty is all the more mala fide, arbitrary and illegal as another officer of the Customs, being the Deputy Collector vide his order, dated 2-3-1994, while refusing relief in different but identical cases has imposed no penalty. According to the petitioner, it is unjust and unwarranted on the part of the respondents to take any action under section 32 of the Act, 1969, for misdeclaration against a claim of refund under section 33 of the Act, 1969. Section 32 can only be invoked .At the time of filing declaration and documents for either importing or exporting goods and not for filing application for refund. The petitioner has lastly contended that the seven impugned orders of the respondent No.3, issued under section 32 of the Act, 1969, are patently without jurisdiction and of no legal effect inasmuch as provision of section 32 can only be invoked when any misdeclaration is given at the time of filing such documents or the alleged false declaration or misdeclaration for the purposes of evading customs duty at the time of assessm ent and consequently duty is evaded or any attempt is made to evade duty.
4. The respondents through their counsel Raja Muhammad Iqbal, have filed their counter affidavit and submitted that the yarn is mainly produced/manufactured on the filing spinning frames and open end rotors. The yarn produced on the former machines is mostly wound on cones/hanks and yam produced on the latter machines is called open-end-yarn and is mostly wound on cheese.
The Federal Government vide its S.R.O. 738(I)/90, dated 11-7-1990 exempted Cotton Yarn manufactured on machines, commonly known as Open-end Rotors and wound in cheese from leviable customs duty. Raja Muhammad Iqbal, advocate, further submitted that the decisions regarding imposition of duty or exemption are made by the Federal Government in its discretion in order to judgment public interest, economic and other development policies to support and encourage certain sectors of the economy and to accelerate growth thereof etc. He has further contended that the orders passed by the concerned officers are lawful and legal and there was no mala fide in adjudication of the case or imposition of the penalties. It is not necessary that different officers issue identical orders in different cases. Even the Central Board of Revenue cannot interfere in adjudication proceedings as specifically mentioned in the proviso to section 23 of the Customs Act, 1969. The Government may impose duty or exempt any item in the wider interest and to give effect to its economic and development policies. He has lastly contended that the refund claims were rejected legally and orders under section 32 of the Customs Act, 1969 were properly issued by respondent No.3, who is duly vested with the powers under section 179 of the Act, 1969.
5. The case of the petitioner is that they had claimed refund. Instead of deciding the claim of refund and passing an order on the claim the customs authorities issued a show-cause notice.
Through this show-cause notice they stated that the exporters filed a claim of refund of customs duty by the letter of even number under the provisions of SRO No. Nil(I)/90, dated 11-7-1990. According to the customs this claim resulted in a scrutiny of record and thereafter they were of the opinion that the claim lacked merits and was not sustainable. This claim was, therefore, filed on misdeclaration of facts with ulterior motives of defrauding the Government of revenue and causing loss to the national exchequer. Through this act the provisions of section 32 of the Customs Act, punishable under section 156(1)/14, were attracted. We have gone through section 32 of the Customs Act, 1969, which starts with the fact that if any untrue statement in connection with the matter of customs is made either through his on documents or upon a question raised by the customs and upon delivering such a document it is seen that any duty or charge has not been levied or short-levied or has been erroneously A refunded then the person liable to pay any amount on that account is to be served with a notice. Furthermore, due to any inadvertent error or misconstruction any duty or charge has not been levied or has been short- levied or has been erroneously refunded then the person liable to pay any amount on that account is to be served with a show-cause notice specifying therein as to why he should not pay the amount mentioned in the notice. The case at hand is one where a refund has been claimed. On the other hand, the provisions of section 32 of the Act, 1969, speaks of (a) duty or charge not levied, (b) short-levied and (c) erroneously refunded. It is obvious that this case does not fall under (a) or (b).
It would have fallen under (c) if the refund had been given. However, that is not the case. It is simply a case of a claim for refund. At the most the respondents could have rejected the claim after assigning reasons. The show-cause notice under section 32 of the Customs Act is erroneous, illegal and issued without lawful authority.
6. This and the connected petitions stand disposed of as above.