JUDGMENT: MR. JUSTICE RANA' .BHAGWANDAS.--(1). This petition is directed against Sindh High Court judgment, dated 19-9-2006 dismissing Special Customs 'Reference No: 152 of 2005 involving the question of levy and payment of customs duties and other charges at the rate payable by the petitioner in the exceptional circumstances existing in the case.
2. The brief facts of the case as stated by the Collector Adjudication-I, Custom House, Karachi in his Original Order, dated 19-12-2000 are as under:- "that the staff of the Directorate General of Intelligence and Investigation (Customs and Excise), Karachi in pursuance of an information raided the premises of Messrs Pakistan Tankage Co. (Pvt.)
Limited, who are the Ware House Keeper as well as importers of R.B.D. Palm oil etc. The scrutiny of the record and verification of stock revealed that a huge quantity of R.B.D. Palm Oil weighing 52651.6070 M. Tons valuing Rs, 1,19,16,91,164 involving duty and taxes amounting to Rs, 53,84,95,798 has been clandestinely removed without filing of Ex-bond Bills of Entry, completion of in-bond formalities and payment of Taxes leviable thereof."
3. Petitioner company is a storage factory used for storing imported RBD Palm Oil which has been declared customs bonded warehouse where palm oil imported by the petitioner, its associate companies as well as other importers is stored. Being the owner of a bonded warehouse petitioner while releasing the palm oil from the terminal for home consumption is required by law to ensure payment of customs duties and other charges. Confronted with such undisputed situation at the initial stage of investigation petitioner agreed to make payment of evaded customs duties and other charges in pursuance whereof petitioner provisionally made a payment of a sum of Rs, 97,503,832 on 5-10-1996 and undertook in writing to pay the balance amount of duties and charges within ninety days.
4. The petitioner, however, defaulted in payment of balance amount of customs duty and other charges due and payable by them within 90 days as a result whereof show-cause notice, dated 25-1-1997 under section 32 of the Customs Act, (hereinafter referred to as the Act, 1969) was issued specifying therein the amount of RBD palm oil illegally removed from the Customs bounded storage facility, the value thereof and the amount of customs duty and other charges evaded.
After issuance of show-cause notice the petitioner made further payment of Rs, 404,795,000 on 9- 9-1997 towards the evaded customs duty and other charges. As certain amount evaded towards the customs duty and other charges remained outstanding the Collector of Customs started adjudication proceedings and decided the same on 19-12-2000 deteimining an amount of Rs, 538,495,798 as due and payable by the petitioner on account of evaded customs duty and other charges. After adjustment/appropriation of the aforesaid two payments a sum of Rs, 57,211,656 was still found outstanding towards the customs duty and other charges. Besides personal penalty of Rs,50 million was imposed against two Directors of the petitioner company by the Collector of Customs, Karachi.
5. The petitioner being aggrieved by Order-in-Original No, 36 of 2000, dated 19-12-2000 preferred an appeal under section 194-A of the Act, 1969 before the Customs, Central Excise and Sales Tax Appellate Tribunal, Karachi which was dismissed by the Tribunal vide judgment, dated 23-5-2005.
Being still dissatisfied with the findings recorded by the Tribunal, petitioner filed Special Customs Reference before the High Court of Sindh which has been dismissed by a Division Bench of the High Court vide judgment impugned in this petition.
6. We have heard the learned counsel for the petitioner as well as the respondents at length duly assisted by Mr. Mumtaz Ahmad Sheikh, Member (Legal), C.B.R.
7. Learned counsel for the petitioner raised two contentions and vehemently argued that; (i) While determining petitioner's liability the rate of duty which was prevalent at the time of removal of the palm oil ought to have been applied and not the rate which was prevalent on the date when the evaded duties and charges were actually paid; and (ii) by the time show-cause notices were served, recovery of duties and charges on the consignments removed in 1993 had already become barred by limitation, therefore the impugned recovery against such consignments was liable to be refunded to the petitioner.
8. We are least impressed by the submissions made by learned counsel for the petitioner as the provision of law requires that where a consignment upon importation is not cleared for home consumption and the importer opts to store it in a bonded warehouse, in terms of section 30(b) of Act, 1969, customs duties and charges on such consignment would be payable at the rates which were prevalent on the date on which ex-bonded Bill of Entry is filed and if the customs duty and charges are not paid within a period of seven days of the date of filing of Bill of Entry then on the rates which were prevalent on the date of actual payment of customs duties and charges.
9. Since the consignments in dispute were wrongfully removed from the Oil terminal of the petitioner for home consumption with a clear intention to evade the payment of customs duties and charges, the procedure provided under section 30(b) of the Act, 1969 would hardly be applicable and the consignments shall be liable to be charged at the highest rate which were prevalent at any of the four stages:-- (i)the date of in-bonding of the consignments; (ii)the date of detection of unlawful removal of the consignments; (iii)the date on which ex-bonded Bills were filed after the detection of unlawful removal; and (iv)the date on which the evaded duties and charges were actually deposited. 10.(sic). The law is well-settled that one cannot be allowed to take advantage of his wrong act or fraud played by him and in fact applying the law applicable to the lawfully taking away of consignments from the bonded warehouse, if applied in such cases, would amount to placing a premium on the fraud played by an importer involved in the act of smuggling. On facts it has been clarified that coincidentally the rate of customs duties and other charges payable on the commodities on the date of filing of Bills of Entries as well as the dates on which the payments were made by the petitioner company was one and the same as stated at the bar by learned counsel for the respondents and confirmed by Member (Legal) Central Board of Revenue, therefore, the Customs authorities rightly applied the said rate of determining the levy of customs duty and other charges. This view is fortified by the judgments of this Court reported as Federation of Pakistan v.
Khurshid Spinning Mills (1998 SCM R 2173) and (ii) Collector of Customs v. Ravi Spinning Ltd. (PTCL 1999 CL. 553).
11. Mr. Fazli vigorously contended that the rates applicable at four stages mentioned above introduced through 3rd proviso to section 30 of the Act, 1969 vide Finance Act, 2004 w. e. 1-7-2004 would not operate retrospectively as the consignments in question were removed as far back as 1993 to 1996. Technically learned counsel may be correct but the proviso inserted in section 30 and introduced by the Legislature fully supports and strengthens the practice adopted by the customs authorities before such amendment in law. It only recognizes the prevailing practice and does not create any additional liability. At any rate once it is held that the petitioner was found indulging in the act of unlawful removal of consignments with a view to evade the payment of customs duties and charges he would not be entitled to seek shelter behind this proposition. Moreover as observed earlier the rate of duties at both events being one and the same the argument looses its efficacy and would be hardly of any significance.
12. In this context it is pertinent to note that on being confronted after preliminary objections wherein the aforesaid acts of illegal removal of RBD Palm Oil and evasion of customs duty and other charges petitioner made part payment of Rs, 97,503,832 on 5-10-1996 and also acknowledged commission of the aforesaid illegal acts agreeing to pay the evaded customs duty and other charges and executed an agreement/bond on a stamp paper to the above effect. It is a settled principle of law that if a person who is liable to make payment of certain amount, the recovery whereof has become barred by law of limitation as provided in any statute, acknowledges and undertakes in writing to make payment thereof, then the period of limitation for recovery of the said amount stands revived. In the present case the acknowledgement of the liability and undertaking to pay the same in writing included evasion of customs duty and other charges in respect of the illegal removal of RBD Palm Oil in 1993. Thus, he would be precluded from challenging validity of the notices under section 32 of the Act of 1969 on the ground that it was beyond the period prescribed in the said section. It will be advantageous to reproduce the relevant portion from the judgment of the High Court dealing with the question of limitation which is as under:-- The second plea that has been taken in the present proceedings is that the applicant is entitled for refund of duties on such consignments against which the proceedings have become barred by time. This plea on the face of it is misconceived. Firstly, after the detection of evasion of the customs duties and charges, the applicant acknowledged its wrongful act and agreed to pay the evaded duties and charges by executing a bond on a stamp paper. Thus there was acknowledgement of liability, which in itself vitiates the plea of limitation. Secondly, had there been no acknowledgment of the obligation in writing, even then the applicant pursuant to investigations into the entire affair of evasion of duties made a payment of Rs,502,298,832. This recovered amount has to be applied first to the duties and charges which are first in point of time. By applying so, the entire consignment imported in 1993, against which only the plea of limitation could have been taken, stands recovered. Under the law even where a claim is barred by time, but for any reason its stand recovered or adjusted, then there exists no occasion for the debtor or obligor to seek refund of such recovered or adjusted amount on the plea of limitation. The law of limitation never extinguishes a right in a time-barred claim. Only remedy for seeking its recovery is barred. Once the time-barred claim stands recovered or adjusted even after the period of limitation has gone by, such recovery or adjustment cannot be said to be unlawful and the debtor or obligor cannot seek refund of such amount on the plea of limitation. In the present case not only the alleged time barred claim stands settled out of the recovered sum of Rs,502,298,832 but on account of applicant's own acknowledgment of liability in writing in the year, 1996, no portion of the demand remained barred by time.
13.From perusal of the above quoted portion from the judgment of the High Court it is observed that the High Court had proceeded in accordance with law in determining the question of limitation for issuance of show-cause notice under section 32 of the Act of 1969 in respect of the illegal removal and evasion of customs duty and other charges in the year 1993. The spirit behind the law of limitation appears to be that the lapse of time does not extinguish the right but it only bars the remedy whereas it is found on facts that after detection of the wrongful act of the petitioner, he had opted to pay the duties and charges as demanded or likely to be demanded is legally estopped from saying that such recoveries were barred by time and therefore he would be entitled to refund of such amounts. In this context it is to be noted that by evading payment of customs duty and other charges which were due and payable on the RBD Palm Oil illegally removed the petitioner had become indebted to the Government/Customs Authorities to the extent of evaded customs duty and other charges. When a person/debtor owes several debts to another person/creditor and makes payment of an amount towards repayment/adjustment of the debts, then in the absence of any specific direction regarding adjustment of the amount so paid against any particular debt, it would be the choice of the creditor to appropriate such payment towards adjustment of any outstanding loan/debt even if it be barred by time. This right has been given to the creditor by section 60 of the Contract Act which is reproduced as under:-- "60. Application of payment, where debt to be discharged is not indicated. Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits."
From a bare perusal of section 60 of the Contract Act it is established that when the debtor omits to intimate to the creditor at the time of making payment of amount/moneys towards repayment of several outstanding loans/debts against him then it is the discretion/choice of the creditor to appropriate the same towards adjustment of any lawful debt due and payable irrespective of the fact that recovery of such debt has become barred by law of limitation for the time being in force.
14. Furthermore in law, the petitioner seeking leave to appeal against the High Court order is not entitled to the discretionary and equitable relief from this Court in the exercise of constitutional jurisdiction as he has not approached this Court or the fora as prescribed under the Constitution and the law with clean hands. One who seeks equity must have equities in his favour. In the present case we are firmly of the opinion that the equities do not lean in favour of the petitioner therefore in our considered view the impugned judgment does not warrant any interference by this Court.
15.Consequently petition is, dismissed and leave refused. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.