SARMAD JALAL OSMANY, J.- All the afore mentioned Appeals concern common issues of law and facts and hence we propose to dispose them of through this judgment.
1. The brief facts of the matter are that the appellant Company has been supplying POL products to the Pakistan Navy for a number of years at a price fixed by the Ministry of Petroleum and Natural Recourses in terms of the notifications issued from time to time. Per the appellant Company, this supply is exempt from payment of custom duty and other taxes under Section 106 of the Custom Act, as the Pakistan Naval Vessels routinely went to foreign ports and territories. However, in the year 2001 show-cause notices were issued to the appellant to the effect that since Pakistan Naval Vessels were not visiting foreign destinations hence they were not covered under Section 106 of the Customs Act. Consequently, the supply of POL by the Company to the Pakistan Navy Was a domestic supply on which applicable customs duties and taxes were payable. A reply to the show- cause notice was submitted on behalf of the Company denying the evasion of custom duty, etc. And reiterating that since Pakistan Naval Vessels visited foreign ports the supply was covered under Section 106 of the Customs Act. The matter was heard by the Addl. Collector of Customs who upheld the view of the Department and directed that the amount of custom duty as assessed be paid. The Company appealed before the learned Tribunal which also upheld the departmental point of view but for different reasons, which were based on the notification issued by the Ministry of Petroleum whereby different prices for POL were prescribed for vessels plying in the territorial waters of Pakistan and those departing for international destinations. Per the Tribunal the price charged to the Pakistan Navy was the lower one i.e. For vessels plying in Pakistani waters which included the element of custom duties and other taxes As these duties and taxes were not deposited in the Government Treasury hence the beneficiary was the Company alone whereas the Pakistan Navy was at a loss since the exemption in duty etc., was never passed on to the latter. This per the Tribunal was a planned evasion and hence the order of the Collector was upheld.
2. Mr. Sajid Zahid learned counsel for the appellant has firstly submitted that the basic issue is whether Section 106 of the Customs Act which provides for exemption of customs duty on POL supply to vessels leaving for foreign destinations would be applicable to the facts of the matter.
According to him Pakistan Navy Vessels do ply in international waters and also visit ports all over the world in connection with their activities. For this submission he has relied upon a copy of the letter issued by the Pakistan Navy to this effect which is available on the record. Secondly per learned counsel, it is a matter of common knowledge that Pakistan Navy Vessels travel all over the world although no precise record is available since the Navy is a defence organization and its movements are classified. However, in this regard he has invited our attention to various newspapers reports concerning the visits of Pakistan Naval Vessels to foreign ports copies of which have been annexed to the appeals. Hence, per learned counsel Section 106 of the Customs Act is fully available to the appellant-company.
3. Next learned counsel has submitted that the impugned orders passed in various appeals (these are three in number relating to CA Nos. 210/2001, 253/2002 to CA 254/2002 and CA 118/2003 to 161/2003) are based on the wrong assumption that since the lesser price of POL is charged to the Pakistan Navy which necessarily includes the element of duty and taxes therefore the same were avoided by the Company and pocketed by it without giving any benefit to the Navy. Per learned counsel the issue is not whether the price charged to the Pakistan Navy included the element of duty and taxes but whether no duties and taxes were payable on the supply of POL made to the Navy. Hence, per learned counsel, the learned Tribunal has fallen into grave error by deciding an issue, which was never pleaded before it by any of the parties.
4. Next learned counsel has submitted that the show-cause notices issued by the Customs Authorities were all time-barred since it is not their case that any willful evasion of custom duty was involved by the Company Lm the same was not paid due to a mistaken interpretation of the law. Consequently the would be controlled by Section 32(3) of the customs Act for which the limitation period was at the time of six months. For this proposition he has relied upon: M/s. China Yunnan Corporation Vs. Collector Central Excise (2001 PTD 661), P.I.A. Corp. Vs. CBR (1990 CLC 868, 373), Federation of Pakistan Vs. Ibrahim Textile Mills Ltd. (1993 PTCL 532) and M/s. Nishat Mills Vs. Federation of Pakistan (1998 PTCL (CL) 392).
5. Finally, learned counsel has submitted that for the past fifty years the Company has not been paying any custom duty etc. On the POL supplied by it to the Navy which has been accepted by the Custom Authorities. Hence, due to this departmental practice the Company has acquired a vested right in the matter which cannot now be interfered with. For this proposition he has relied upon: Nazir Ahmed Vs. Pakistan (PLD 1970 SC 453), Asian Food Industries Vs. Pakistan (1985 SCM R 1753), M/s. Radaka Corporation Vs. Collector of Customs (1989 SCM R 353) and Government of Pakistan Vs. Manzoor Brothers (1994 SCM R 1953).
6. For all the foregoing reasons, learned counsel has submitted that the impugned orders be set aside and the appeals allowed.
7. On the other hand. Mr. Raja Muhammad Iqbal appearing for the Custom Authorities has firstly submitted that CA Nos. 170/2002 to 254/2002 are barred by limitation since they were filed on 6.12.2001 viz. Beyond thirty days of service of the impugned orders on the Company per Section 196(2) of the Customs Act. According to learned counsel per the memos, of Appeal themselves the impugned order was served on the Company on 23.10.2001.
8. Next learned counsel has submitted that the issue of limitation viz-a-viz the show-cause notices was never raised before the learned Tribunal or for that matter before the Collector and hence cannot be raised in these proceedings. For this proposition he has relied upon: Thatta Cement Company Vs Customs, Centra! Excise and Sales Tax Appellate Tribunal (2003 PTD 1899). Rana Brothers Oil Mills Vs. A.C. Sales Tax (2002 PTD 2526). M/s. Faran Enterprises Vs Appellate Tribunal Customs. Excise and Sales Tax Tribunal (1999 CLC 735), M/s Collector of Sales Tax Vs. M/s. Munaf Lace (2002 PTD 1033) and Juma Khan Vs. Bibi Zenaba (PLD 2002 SC 823).
9. On merits learned counsel has upheld the view of the Custom Authorities that the benefit of Section 106 of the Customs Act is not available to the Company as Pakistan Navy Vessels only ply in domestic waters.
10. In reply Mr. Sajid Zahid has submitted that the starting point of limitation insofar as the filing of these appeals are concerned, per Section 196(2) of the Customs Act would be thirty days counted from the date the aggrieved person is served with notice of a order under Section 194-B. It this connection he has pointed out that insofar as Civil Appeal No 210/2001 is concerned it impugns the order dated 2 10.2001 passed by the learned Tribunal which was a common order relating to Appeals Nos. 1191/2001 to 1232/2001 pending before it and which was served on the Company on 23.10.2001 per the endorsement on the impugned order itself. So also the said Appeal viz. No. 210/2001 also impugns the order passed by the learned Tribunal dated 21.10.2001 in Appeals Nos.
993/2001 to 1035/2001 pending before it which was served on the Company on 19.11.2001 as per the endorsement thereon. Hence CA 210/2001 which was filed on 21.11.2001 is within time viz. Within thirty days of the service of both the impugned orders. Thereafter due to the office objection as to how one Appeal could be filed against the impugned orders regarding 85 cases, 85 separate Appeals were filed bearing Nos. 170/202 to 254/2002 on 6 12.2001 Hence per learned counsel for the purpose of limitation the appeals were properly filed within time on 21.11.2001
11. As regards limitation for serving the show- cause notice upon the appellant is concerned, per learned counsel in all the appeals the issue of limitation was raised before the learned Tribunal per the Memos, of Appeal and hence can be raised in these proceedings as well for which proposition he has cited Assistant Collector Customs Vs. Khyber Lamps (2001 SCM R 838) Learned counsel has distinguished Thatta Cement Company (Supra) on the basis that the issue of limitation raised before the Hon'ble Supreme Court was never taken before either the High Court or Tribunal. He has cited Fazal Muhammad Vs. Nabi Bakhsh (1969 SCM R 531) for the proposition that limitation can be pleaded before the Hon'ble Supreme Court also for the first time provided the facts are admitted, It Thatta Cement Company (supra) limitation was a mixed issue of law and fact and hence the Supreme Court declined to entertain it He has also submitted that in CA 118/03 a list of cases has been given whereby the issue of limitation was decided in favour of the appellant by the learned Tribunal. He has, therefore, prayed that the issue of limitation, as regards the show-cause notices be decided also in favour of the appellant.
12. We have heard both the learned counsel and our conclusions are as follows:--
13. We would first like to address the issue of limitation insofar as filing of these appeals are concerned which has been raised by Mr. Raja Muhammad Iqbal learned counsel for the respondent with regard to L-. Nos. 170/2002 to 254/2002. It would be seen that CA No. 210/2001 was filed against the common impugned order dated 2.10.2001 passed in Appeal No. CU 993 to CU 1039/2001 by the learned Tribunal. This was dispatched by the office of the Tribunal on 23.10.2001 to the appellants and received by them on the same day. As much has not been disputed by any of the parties. Thereafter CA 210/2001 was filed by the appellant on 27.11.2001 i.e. Within thirty days of dispatch of the impugned order as provided under Section 196(2) of the Customs Act. Thereafter due to the office objection as to how one appeal could be field in 85 cases CA Nos. 170/2002 to 253/2002 were filed by the appellant on 6.12.2001. Consequently, in view of the afore-mentioned circumstances in our opinion CA 170/02 to 254.02 are not time-barred
14. As regards the issue whether limitation viz-a- viz. The show cause notices served upon the appellant, can be considered by this Court or not it would be seen that as a matter of general principle the issue of limitation can be raised even before the Apex Court, provided it is a pure question of law and the facts are not in issue since in most cases the question of limitation is a mixed question of law and fact. For this proposition Fazal Muhammad Vs. Nabi Bakhsh (supra) can be cited as well as Muhammad Butta Vs. Habib Ahmed (PLD 1995 SC 153). However, insofar as Appeals before this Court from the orders of the learned Tribunal are concerned per Section 196(1) of the Customs Act only a question of law arising out of the order of the Tribunal can be entertained, It is not disputed before us that the question of limitation is a pure question of law which was taken before the learned Tribunal in the Memo, of Appeal by the appellant. However per the impugned order nothing has been observed regarding this aspect of the matter, It this event, we are of the opinion that the term "arising out of the order of the Tribunal" not only includes those legal issues on which the Tribunal has expressed an opinion but also such issues, on which no opinion has been expressed though pressed before it by a party. To hold otherwise in our opinion would be in appropriate as it would close the doors of appeal to a party before this Court. As regards, the case of Thatta Cement Company (supra) the same in our opinion is distinguishable on facts because in that case although the question of limitation was taken in the grounds of appeal before the Tribunal but not pressed as would appear from the order of the Hon'ble Supreme Court, It the present case, as observed above, nothing has been said by the Tribunal on the question of limitation though it was taken in the memo, of appeal by the appellant. Similarly, we are of the opinion that the case of Rana Brother Oil Mills Vs. A.C. Sales Tax. (supra) is also distinguishable because in that case neither was a question of law regarding the maintainability of the appeal raised before the Tribunal nor any opinion expressed thereon. Consequently, we are of the opinion that the question of limitation urged before the Tribunal by the appellant, though not answered vide the impugned orders, can be raised before this Court being a pure question of law as the facts of the matter would demonstrate.
15. Next we would take up the issue whether the show-cause notices were served by the Customs Athority upon the petitioner were barred by limitation, It this respect it would be seen u at per the show-cause notices which are of various dates in the months of February, March, May, June and December, 2001 the alleged evasion of custom duty is regarding the supplies made in the year 1997 to 2000. Secondly, the wording employed in the show-cause notices are to the effect that custom duty was evaded due to a wrong interpretation of Section 106 of the Customs Act by the appellant viz. That Pakistan Navy ships proceed to foreign territories which is factually incorrect and hence the benefit under Section 106 could not be claimed by the appellant, It these circumstances, we are of the opinion that Section 32(3) of the Customs Act would be applicable which at the relevant time provided a period of six months of the relevant date with in which show-cause notices are to be issued where the case relates to a non-levying, short levying or erroneous refund of custom duty by reason of any inadvertence, error or misconstruction. Consequently, we would hold that the show-cause notices issued to the appellant on various dates in the year 2001 pertaining to the afore-mentioned appeals are time-barred since the transactions thereunder, viz. Supply of POL to the Pakistan Navy was in the year 1997 to 2000 per the shipping bills in question viz. After expiration of six months, It this regard reference can be made to Federation of Pakistan v Ibrahim Textile Mills and Pakistan International Airlines Vs Central Board of Revenue (supra) Hence, the impugned orders of the learned Tribunal pertaining to these appeals are set aside as also the orders of the Collector.
16. As we have come to the conclusion, that the show-cause notices are time-barred, we are not inclined to address the merits of the case. However, we may observe that the learned Tribunal has not decided the real issue raised before it by the appellants viz. Whether the supplies made to the Pakistan Navy were exempt under Section 106 of the Customs Act from payment of duty etc. Unfortunately, the learned Tribunal dismissed the appeals of the appellants on another ground viz. Since the rates charged to the Pakistan Navy by the appellants were those prescribed for domestic Pakistani Vessels hence of necessity these included the element of custom .Duties and taxes which the appellant pocketed instead of depositing it with the exchequer. Consequently, the learned Tribunal was of the view that since such rates were for vessels playing in the domestic waters of Pakistan, Section 106 would not be applicable (although as much has not been stated in the impugned orders).
17. The above are the detailed reasons, for the short order passed earlier by us allowing these appeals. A copy of the same shall be sent to the learned Tribunal by the Office.