FINDINGS /DECISION ' JUSTICE (RETD.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---The Complainants have stated in the complaint that they imported a consignment of spares through the Karachi Airport vide bill of entry dated 1-11-1999 which was cleared without payment of duty and sales tax under S.R.O.
554(I)/98 on furnishing an indemnity bond to produce the installation certificate within one year of the date of import. Due to unavoidable circumstances the spares could not be installed within the stipulated period and C.B.R. Was requested vide letter dated 14-12-2000 to condone the delay in submission of the installation certificate which was allowed and the period was extended up to 28- 2-2001.
2: When the Assistant Collector of Customs, AFU, issued a detention notice dated 12-2-2001, he was informed vide letter dated 22-2-2001 about the condonation of delay by the C.B.R. The Assistant Collector, .Multan, issued the installation certificate on 28-2-2001 which was also endorsed to the Collector of Customs (Appraisement). On receipt of the certificate, the Assistant Collector AFU .Should have released the indemnity bond and withdraw the detention notice. This was not done.
Instead the Collector of Customs (Exports) (on the basis of the detention notice) deducted an amount of Rs,116,725 from their pending refund claims.
3. It was alleged that this was a clear case of maladministration as after the issue condonation of delay by C.B.R. On 29-1-2001, the Assistant Collector should have withdrawn the detention notice. It was further stated that the deducted amount has not been refunded by the Collector (Exports) despite repeated reminders and personal visits of the staff. It was requested that the respondent be directed to refund the illegally deducted amount of Rs,116,725 with a mark-up of 14% and strict disciplinary action be taken against the Collector of Customs (Appraisement), the Collector of Customs (Exports) and the Assistant Collector AFU for ignoring the C.B.R.'s letter.
4, The Deputy Collector of Customs AFU replied to the complaint that the refund claim has now been processed and sanctioned. Since the Preventive Collectorate was not aware of the extension granted by the C.B.R. And the installation certificate was not produced in time, the detention notice was issued (and the recovery made by the Exports Collectorate). The Complainants furnished the installation certificate vide letter dated 19-4-2001 and filed claim for refund of Rs,116,725 on 18-6- 2002. On receipt of the complaint, refund was sanctioned on 19-6-2004. During the hearing of the complaint the Director of Gulistan Textile Mills Limited confirmed that a cheque for Rs,116,705 has been received and there was no cause of action against the Department.
5. From the submissions made by both the sides it transpires that the detention notice was issued without first giving a notice or a reminder to the Complainants to produce the installation certificate and the refund was. Not sanctioned till a complaint was lodged in this office and notice issued to the respondent. The refund claim remained pending for one year without justification.
Maladministration is established.
6. It is observed that the installation of the imported articles was delayed and the time-limit was extended by the C.B.R. Vide letter dated 29-1-2001. The installation certificate issued by Assistant Collector, Multan, was not endorsed to the Collector of Customs (Preventive) from whose jurisdiction the goods had been released against indemnity bond. However, when it was brought, to the notice of Collector of Customs (Exports) that the requisite installation certificate has been issued, the amount recovered from the Complainants should have been refunded. There was no justification for not taking action on the refund claim for two years and refund the recovered amount only when a notice was issued by this office.
7. The complainant has claimed mark-up @ 14% P.A. As compensation. There is no provision under the Customs Act to grant B compensation for delay in payment of refund. Under section 22 of Ordinance XXXV/2000 (FTO Ordinance) compensation may be awarded to an aggrieved party for any loss or damage suffered by him on account of maladministration committed by a tax employee or the Revenue Division. Therefore proof of loss or damage due to the delay caused by non payment of refund within time should be established. In this regard there should be some material or evidence to show that damage or loss has been caused to the aggrieved party. Mere fact that delay in payment of refund has been proved as maladministration is not sufficient to grant compensation. It is not a case where the statutes itself provides for compensation under section 171 of the Income Tax Ordinance 2001 and section 67 of the Sales Tax Act. In these circumstances the compensation cannot be granted merely because of delay. In this regard amendment is required in the Customs Act to make a provision for compensation as in the Sales Tax Act and Income Tax Ordinance 2001. It will be a beneficial provision for the aggrieved party.
8. Under section 216 of the Customs Act it is provided that no owner of the goods shall claim from any officer of customs compensation unless it is proved that such loss, damage was occasioned by gross negligence or wilful act of such officer. As compensation has been provided for delay in payment of refund in the Sales Tax Act and the Income Tax Ordinance which are fiscal statutes it will be just and proper that similar provision be added in the Customs Act as well. The Revenue Division should take step for amendment of the Customs Act to provide provision for compensation for delay in payment of refund.
9. With these observations the case is closed.