MR. MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL).--(1). By this order, will intend to dispose off aforesaid Customs Appeal, filed by the appellants against Order-in- Appeal 127/2007 dated 17.10.2007, passed by the Collector of Customs, Sales Tax & Federal Excise (Appeals), Lahore.
2. Brief facts of the case are that in pursuance of an information regarding misuse of concessionary SRO by M/s. Honda Atlas Cars (Pakistan) Ltd., a team of the Customs staff was constituted to audit the records of the above importer. The above team scrutinized the record pertaining to imports made by the importer i.e. Bills of Entry, Invoices, Packing Lists, Deletion Programme, Form-S, Provisional/Final Certificate, concessionary SROs/notifications. During the course of audit and scrutiny of documents it revealed that the importer availed the benefit of concessionary notification SRO No. 502(I)/94 dated 09-06-1994 for the import of certain components for manufacturing Honda City/Civic cars over a specific span of time. The importer filed the bills of entry through M/s. Razziq International (Pvt.) Ltd., Lahore (detail as given in the enclosed list) claiming the benefit of the aforesaid SRO/notification and by making the due declaration thereon. The said SRO/notification provides the benefits of exemption of Customs Duty for only those components as are not manufactured locally. The preamble of the said SRO/notification clearly stipulates as under:- "the Federal Government is pleased to exempt the components as are not manufactured locally imported for the manufacture of vehicles, machinery and equipments specified in column 2 of the table below from so much of the Custom duty as are in excess of the rates specified in column 3 thereof."
3. However, on scrutinizing of the relevant import documents i. e. Invoices and packing lists it has been observed that the importer has availed the benefit of exemption of Custom Duty on those components which are duly manufactured locally without caring for that these have been included in the list of locally manufactured items vide CGO 07/98. These items are as:- "Crank Shaft, Cam Shaft, Shaft in Rocker, Shaft EXH Rocker, Gasket injector Box, Gaskit EXH Pipe, Gasket Flex EXH, Gasket Pre Chamber, Shaft Assy R Drive, Seal Assy Gasket, Handle Assy LFR/DR-OUT, Handle Assy R RR-DR OUT, Handle Assy R-FR-DR- OUT and Handle Assy."
4. The benefit of exemption of custom duty on the import of above components is absolutely in negation of the provisions and very scheme of the said SRO notification as these components have been identified in the list of locally manufactured items and by this way the importer has deprived the national exchequer of its legitimate part of revenue Rs. 98.87 Million.
5. The foregoing facts make it clear that the importer not only imported the items included in the locally manufactured items list by availing concession and also blatantly violated the express provisions of the concessionary notification. And as such the importer got the illegal and unwarranted benefits causing loss of Rs. 98.00 million to the national exchequer. This action on the part of the importer constitutes a violation of provisions of notification number SRO 502(I)/94 issued under section 19 of the Customs Act, 1969 dated 09.06.1994 and sub-section (1) of section 32 of the Customs Act, 1969 which is punishable under clause 10-A and 14 of section 156(1) ibid besides liable to make payment of evaded amount of duty and taxes as required under section 32(2) of the Customs Act, 1969. The matter was reported for adjudication. As a consequence of adjudication, appellants were directed to deposit the evaded/short levied amount of duty and taxes of Rs.
98,867,412/-.
6. The appellant being aggrieved by the said order, filed an appeal before Collector (Appeals)
Lahore who also rejected the appeal hence the instant appeal on the following grounds incorporated in the memo, of appeal:-
(a) That the Appellant was not afforded adequate opportunity to present its case or to lead evidence in a manner befitting the allegations made in the Show Cause Notice against the Appellant. It is a cardinal principle of law that no one should be condemned unheard. Thus, the due process rights of the Appellant granted under the Constitution of the Islamic Republic of Pakistan have been gravely prejudiced and the Impugned Orders are liable to be set aside.
(b) The Respondents have not given due consideration to the grounds and issues raised by the Appellant in writing as well as the oral arguments submitted before the Respondents. In the Impugned Orders, the Respondents depict the provisions of the Act and the Notification in a manner, which is alien to the principle of interpretation of statutes. The Respondents failed to give rationale consideration to the legal principles established by the Superior Courts who are entrusted with the responsibility of interpretation of statutes.
(c) That the Respondents have failed to apply their mind to the facts of the case and proceeded to decide the appeal on assumptions contrary to the actual facts and circumstances.
(d) That the Impugned Orders passed by the Respondents are based on surmises, presumptions and conjunctures and thus the same are liable to be set aside.
(e) That it has been held by the honorable Courts and Tribunals on numerous occasions that the show cause notice in order to be valid, legal and binding must provide whether the same is issued under section 32(2) or 32(3) of the Act, since the two subsections are of different nature and scope and there are different periods of limitation. In the absence of a clear mention of either of the two sub-sections, the show cause notice would be incomplete and void, hence unenforceable. The Show Cause Notice, prior to being illegally and unlawfully amended by the Corrigendum, does not provide whether it has been issued under section 32(2) or 32(3), hence the same is void and illegal.
Therefore, the Show Cause Notice and the Impugned Orders are liable to be set aside.
(f) The honourable Courts and Tribunals on numerous occasions have also held that the show cause notice in order to be valid, legal and binding must contain the specific facts with details in respect of allegations contained under section 32(2) or 32(3) of the Act, because it is with reference to the nature of the allegations that the period of limitation for issuance of show cause notice would be determined. In the absence of any details or allegations regarding collusion or deliberate act being cause of short levy, it cannot be said that the notice has been issued under section 32(2). The Show Cause Notice does not contain any details or allegations regarding collusion or deliberate act on part of the Appellant as is required under section 32(2) of the Act, hence the Show Cause Notice is time barred as section 32(2) is not applicable as pointed out above.
(g) It is submitted that in the Black Law's Dictionary (7th Edition, 1999) the word "corrigendum" has been defined as "an error in a printed work discovered after the work has gone to press". In this regard it has been authoritatively observed by the superior courts that "An official corrigendum is a document to contain correction of a mistake or to supply omission in the document earlier issued.
Corrigendum is therefore, nothing else than correction of mistake or to supply the omission occurring in the predecessor document" (PLD 1987 Peshawar 68 atp. 76). It is significantly pointed out that the Corrigendum to the Show Cause Notice is not a corrigendum, i.e., it does not correct a mistake or supply an omission in the Show Cause Notice. It is specifically stated that the issuing authority is, through the Corrigendum, attempting to substantially amend and change the Show Cause Notice and bring it within the limitation period. Furthermore, the Corrigendum is. In fact, a supplemental to the Show Cause Notice whereby the issuing authority, who is supposed to adjudicate the matter, in a partisan manner introduced fresh allegations of tax evasion against the Appellant at a very late stage in the proceedings. Thereby, the issuing authority in fact admitted that Show Cause Notice was bad in law and the allegations levied under the same were not supported by the provisions of the Act relied therein. It is established law that such recourse may not be taken. Therefore, the Corrigendum is illegal and liable to be declared void and the Impugned Orders are liable to be set aside.
(h) That it is specifically stated that legal proceedings encompass the proceedings initiated at the lowest stage, i.e., institution of suit of issuance of show cause notice up to final adjudication of the matter. It is submitted that it is established law that from the issuance of the show cause notice and the allegations contained in the same, the 'proceedings' commenced and the said proceedings may not be changed/modified, thereafter till adjudication and final resolution of the matter by the highest applicable forum. Thus, the Corrigendum, issued by the issuing authority, amounts to unduly prejudicing the interests of the Appellant, and the said conduct is contrary to law and the Constitution of Islamic Republic of Pakistan. It is pertinent to note that the Corrigendum was only issued after concern about the limitation period was raised by the Appellant vide the Clarification. Therefore, the Corrigendum is illegal and liable to be declared void and the Impugned Orders are liable to be set aside.
(i) That without prejudice to foregoing, it is submitted that it is established principle of law that a party raising an allegation must, at the same time of issuance of the show cause notice, where after, the proceedings are initiated, specifically state the precise allegation and the basis thereof and must also produce the documents supporting that particular allegation. In case of non- compliance, a show cause notice would be void. The said principle is also enshrined in the Judgment of this honorable Tribunal in STA No. 1999/LB/2001 dated 28-11-2001. It is specifically pointed out that the Show Cause Notice failed to comply with the said requirements. Furthermore, without prejudice to forgoing it is also pointed out that the Corrigendum, also fails to meet the said requirements, as it simply adds the sub-section allegedly contravened by the Appellant, without providing any documents on the basis of which the said allegations are levied. In view whereof, it is submitted that the Show Cause Notice as well as the Corrigendum, issued without compliance of the legal pre-requisite(s) were void and liable to be withdrawn and the Impugned Orders are liable to be set aside.
(j) That it is submitted under the general principles of law also, additional allegations and/or additional evidence and/or modifications/amendments in respective pleadings may only be made/led if the same will not unduly prejudice the other party. Furthermore, it is also a presumption that once the parties have set up their case/defence, then any subsequent amendment/modification, shall prima facie unduly prejudice the other party. Applying the said general principles of law to the present matter, it is specifically averred that issuance of the Corrigendum and introducing new allegations at such a late stage in the proceedings, was contrary to law and caused great injustice to the Appellant. Thus, the same is liable to be declared illegal and void.
(k) That it is submitted that the items mentioned in the Show Cause Notice allegedly imported by the Appellant in violation of the CGO 7/98 are not found in the CGO 7/98. There is nothing on record to show and neither has the Department proved that there is any restriction on the import of the said items in terms of the CGO 7/98. In view whereof, the Impugned Orders are liable to be set aside.
(l) That without prejudice to the above and any other grounds taken in the appeal, the honourable Supreme Court of Pakistan has interpreted the term 'such machinery as is manufactured locally'. It has been held that the said term has to be given a pragmatic and a realistic meaning in the context of industrialization in the country. The honourable Supreme Court has gone on to observe that where for example, a machinery is locally manufactured, prior to and subsequent to but not during the year when the order is placed, the exemption cannot be refused on the ground that local manufacture has been taking place notwithstanding the gap forcing the entrepreneur to seek it from abroad. In pursuance of the aforementioned observations of the honourable Supreme Court, the honourable Lahore High Court, Lahore has held, with respect to CGO No. 17 of 1994 (the predecessor of CGO 7 of 1998), that it has to be determined factually whether or not goods mentioned in a CGO are actually and in fact being manufactured locally. The High Court has observed that "the determination that the goods were being manufactured locally by the Central Board of Revenue could only be arrived at after a factual inquiry with which the concerned persons should have been associated". In view whereof, it is submitted that assuming, without conceding, that the said goods are mentioned in the CGO 7/98, it has to be determined whether or not the same were being manufactured in the country during the relevant period. In the event the same were not being manufactured in the country, there would be no bar on their import at the exempted rates*-4n accordance with the relevant deletion programme.
(m) That it may be pointed out that for every industry, there is an Industry Specific Deletion Programme ("ISDP") duly approved by the EDB. The deletion level in ISDP generally consists of 3 lists.
List "A" represents all those components, which have been ' successfully developed by at least one OEM (Original Equipment Manufacturer). List "B" represents components, which are to be deleted over a 'period of time' as specified in the deletion programme. List "C" consists of items, which are considered undeletable due to the non-availability of the manufacturing in the country. An item included in List "A" of ISDP may be approved as an item of list "B" or "C" of the Unit Specific Deletion Programme ("USDP") of a particular unit. There is a possibility that one particular OEM has developed a particular item and it is indicated in list "A" of [1] S.R.O. No. 645(I)/06 has been stated to be issued by respondent No. 1 under the provisions of section 7A. The relevant portion of the said S.R.O, is in the following terms (1).
"S.R.O. 645(I)/2006.~In exercise of the powers conferred by section 7A of the Sales Tax Act, 1990, read with subsection (6) of section 3 thereof, and in supersession of Notification S.R.O. 553(I)/2006 dated the 5th June, 2006 the Federal Government is pleased to direct that the sales tax leviable on local supply of pesticides shall be charged at the import stage on finished pesticides (PCT heading 38.08) and the active ingredients of pesticides mentioned in table below on the basis of fixed value addition of fifteen percent in addition to the tax leviable on import under subsection (1) of section 3 of the said Act and no sales tax shall be charged on further stages of supply of pesticides whether imported or locally manufactured." [2] That the CIT(A) wrongly upheld the charge of tax at Rs.
7977/- in assessm ent year 1999-2000, and Rs. 48,880/- during the assessment year 2002-2003, u/s 80D of the I.T. Ordinance, 1979 as the voluntary contributions of the appellant are not "turnover".
3. That the order of the Learned CIT(A) confirming the order of the assessing officer u/s 52/86 of the repealed I.T. Ord., 1979 [4] Being aggrieved, the assessee-taxpayer went in first appeal proceedings before the Learned CIT(Appeals) who vide his order cited (supra), agreed with the logic mid reasoning of the assessing officer as in the absence of availability of specific exemption, the rejection of appellant's contention was right because mere filing of an application does not amount to the grant of request made therein. The Learned first appellate authority has also relied on an identical situation whereby his lordship Mr. Justice Nasim ISDP but the same item may not have been developed by the other OEM. Therefore, the said item might be included in list "B" of the approved deletion programme of a unit i.e. In its DSDP. The said item will be importable under S.R.O.
502(I)/94 (the "SRO") for the specific unit in spite of the fact that it is included in list "A" of the ISDP.
ISDP is supposed to serve the EDB/Ministry of Industries and Production or the C.B.R., as the case may be, to approve' the progressive, annual deletion achieved under DSDP by a particular manufacturer as required under the SRO. Hence, ISDP is a reference document indicating state of industry and targets for deletion to be achieved by the relevant manufacturers. In this regard, it is pertinent to point out that items mentioned in the Show Cause Notice allegedly imported by the Appellant in violation of the SRO and the CGO 7/98 are to be found in list "C" of the ISDP of the relevant period, which, it is reiterated contains those items considered undeletable due to the non availability of the manufacturing in the country. In view whereof, it is clear that even if the said items were mentioned in the CGO 7/98, the same were not being manufactured locally and in view of the observations of the superior courts, the Appellant could import the same on exempted rates of duty.
(n) That it is specifically averred that the CBR has clarified time and again that Customs General Orders with respect to locally manufactured items were not applicable where imports were being made under deletion programmes duly approved by the EDB. Therefore, where an importer is making imports under an approved deletion programme, custom general orders with respect to locally manufactured items have no applicability. In this regard, it is pertinent to note that CBR vide Circular C. No. (88) Mach 184 (AC 1) dated 26-5-1994 addressed to all field Collectors has clearly stated, inter alia, that the import of components/parts was allowed under deletion programmes after consideration of the capability and potential of local manufacturers and that the indiscriminate application of CGO 9/92 (the predecessor of CGO 7/98) was defeating Government's efforts to encourage Indigenization and transfer of technology. The said circular goes on to state that "Board is pleased to order that CGO 9/92 will not apply to imports made in cases where deletion programmes are applicable and the import of specific items is allowed". The aforesaid principle was reiterated and confirmed by the CBR vide its letter bearing C. No. l(26)S&R- 2/84 dated 10-6-2002 addressed to Custom House, Lahore.
(o) That it may be specifically pointed out that EDB, pursuant to the direction of the Respondent No. 1 in this specific case, clarified the matter vide its letter dated 15-6-2007 bearing no. EDB/TBS-/107 that CGO 7/98 was not applicable to the imports made by the Appellant, under the scheme of the deletion programme. It specifically stated inter alia, that "EDB is of the opinion that as per the established principle, CGO 7/98 (list of locally manufactured parts) will not apply to imports made by M/s, Honda Atlas Cars (Pakistan) Ltd. Under their respective USDP (Unit Specific Deletion Programme) approved by EDB and validated by CBR". Hence, the Impugned Orders are liable to be set aside.
(p) That all imports made by the Appellant were in reliance upon and in accordance with the approved DSDP for the relevant period. Hence, assuming but not conceding, that the same were in violation of the terms of the SRO, the Appellant may not be penalized for the same on the basis of the doctrine of promissory estoppel.
(q) That without prejudice to the above, it is averred that one of the main purposes of the scheme of Indigenization/deletion programmes was progressive manufacture. In order to achieve the said goal, fiscal incentives were extended to the manufacturers. These incentives were normally in the form of total/partial exemption from the standard rate of duty applicable to the import of relevant goods. In the present case, the rate of duty on the items mentioned in the show cause notice was 35% under the Notification. During the same period, the rate of duty applicable on the normal imports of the said items as per the Customs Tariff was also 35%. Therefore, it is clear that no loss was caused to the Government exchequer as alleged in the Show Cause Notice. In view thereof, the impugned orders are liable to be set-aside.
(r) That the EDB, which as per the Notification is vested with the exclusive authority to approve, supervise and determine any defaults under the deletion programmes, has time and again issued instructions and clarified that the imports made by a manufacturer under an approved deletion programme are to be governed only by that particular deletion programme and no other document. In the present case, the EDB has specifically clarified vide its letter bearing No. EDB- 005/03/04 dated October 11, 2004 that 'the imports are to be monitored against deletion programmes issued vide Endorsement No. 2282 dated 23.04.03 and 2384 dated 23.07.03 for Honda Civic & City respectively...... '. In view of the said letter, this issue stands settled beyond any doubt and it is clear that both the show cause notice and the impugned order are in clear violation of the instructions and clarifications of the EDB and are thus liable to be set-aside.
(s) That, without prejudice to the above abjections, it is specifically averred that Clause (iii) of the Notification provides:- "(iii) the manufacturer shall chalk out indigenization program spreading over a maximum period of five years within which period he shall achieve a minimum indigenization of the manufacture of vehicles, machinery and equipment as approved by the Indigenization Committee of the Engineering Development Board. In case of any default in the indigenization program, the components imported in violation of the indigenization program shall attract statutory duty chargeable on the relevant CBU vehicles. Defaulted percentage in the annual indigenization targets will be determined by the Indigenization Committee and the continued availability of the exemption under the Notification shall be contingent upon, the achievement of progressive annual indigenization." As per the aforesaid provision, defaulted percentage in the annual indigenization targets will be determined by the Indigenization Committed of the EDB. Hence, it is not within the purview of the Customs Department to determine and adjudicate upon any defaults under the Notification and/or the deletion programmes. It is for the Indigenization committee of the EDB to conduct annual audits and thereby determine the consumption of parts by the Appellant in the manufacture of cars. Any defaults under the Notification and the deletion programmes can only be ascertained by the indigenization Committee after they have conducted the said audit and not before and certainly not by the Customs Department.
(t) That both the show cause notice and the impugned order are based on false and baseless allegations made by the department and no evidence whatsoever has been placed, on record to prove the allegations leveled against the appellant. It is a well established principle of law that the party making an allegation must bring evidence to prove the allegation. In the present case the department has miserably failed to bring forth any evidence to substantiate its allegations against the appellant and thus, the show cause notice and the impugned orders are liable to be set-aside.
(u) That the impugned order is based on erroneous assumption of law, since it is a well established principle of interpretation of statutes and in particular the fiscal statutes, that the provisions of the statutes are to be constructed literally and no words are to be added to the same, which may increase the liabilities of its subjects. Furthermore, if the interpretation given by the respondents in the impugned orders are accepted as the correct one, it would lead to absurd/unjust results.
(v) That the impugned orders are not a speaking order as various arguments/grounds raised by the appellants have not been adjudicated upon by the respondents in the impugned orders, the respondent ignored the various grounds raised by the appellants and neither addressed/considered nor rebutted the same. Therefore, the impugned orders lack judicial determination of the issues involved in the proceedings initiated and conducted by the respondents under the show cause notice. Thus, the impugned orders are liable to be set-aside.
(w) Lastly he prayed to allow the appeal.
The department filed pari wise comments which are as
(a) Not admitted. The Appellant were given proper opportunity to give their arguments in writing as well as a number of hearings were fixed to hear the case in person. The appellants represented their case through written arguments and also defended their viewpoint orally, after which the case was decided on merits.
(b) Not admitted. The grounds and issues raised by the appellant were properly considered while deciding the case.
(c) Not admitted. The case was adjudicated after going through all the facts and figures of the case and was decided on merits.
(d) Not correct. The case was decided on its facts and hence liable to be maintained and the appellant may be directed to pay the said amount.
(e) Not correct. The details of allegation were provided in the comprehensive show cause notice issued under section 32(1) & (2) of the Customs Act, 1969 as the appellant has mis-stated the rate of duty chargeable on import of locally manufacture/ components, and thus caused colossal loss to the national exchequer.
(f) Not correct. The show cause notice issued contains all the details and facts of the case, resultantly; a huge amount of Government revenue was evaded.
(g) Not correct. Since there was an omission in the show cause notice that the complete provisions of the law have not been mentioned therein, therefore, corrigendum was correctly and lawfully issued prior to the defense taken by the appellant.
(h) Not correct. Same as above.
(i) Not correct. The appellant as a manufacturer of motor vehicle is availing exemption of Customs duty in terms of SRO 502(I)/94 dated 09.06.1994. Accordingly to which the exemption was conditional that imported parts should not be manufactured locally. The locally manufactured items were listed in CGO 7/98. The importer in this case violated the provisions of the said SRO by availing exemption on the locally manufactured items.
(j) Not correct. Same as above.
(k) Not correct. It is clearly mentioned in the preamble of the SRO i.e. The Federal Government is pleased to exempt components as not manufactured locally and the said imported items hit by CGO 7/98 were being manufactured locally and the imports thereof were made in violation of the SRO 502(I)/94.
(l) That in the light of specific condition regarding exemption, under the said SRO and in the presence of CGO 7/98 further enquiry was not required, and said exercise was carried out in association with the representative of the appellants and report thereof was furnished to the respondent No. 1 as well.
(m) Same as above.
(n) That at the time of clearance, under SRO 502(I)/94 CGO 7/98 was infield and the Board vide C.
No. 1(26)S&R184 dated 01.02.2002 clarified that locally manufactured items were not allowed concession under the concessionary SRO's.
(o) As at para. 15 above.
(p) That the appellant in the item in violation of SRO 502(I)/94 read with CGO 7/98 hence are liable to the penalized in accordance with the provisions of law.
(q) Not correct. The importer as a manufacturer of automotive vehicles is enjoying exemption of customs duty in excess of 35% on import of CDK kits under SRO 502(I)/94 dated 09.04.1994 which were otherwise chargeable to CBU rate of duty. While conducting audit of the imports made by appellants for the period January, 2000 to June, CL. 704 Vol. XXIX, P. T.C.L, 2011 (Case Laws) \ 2001, it has been observed that certain locally manufactured parts included in the list of CGO 7/98 were also imported in the CKD kits availing the benefit, which was otherwise not admissible to them.
(r) Not correct, same as above.
(s) Not correct. The Engineering Development Board approves the Deletion Program for the import of components/sub-components to be used in the progressive manufacturing of automotive vehicles. The department has never challenged the short fall in deletion achievement, but has detected the illegal import of locally manufactured items (Listed in CGO 7/98) in the CKD kits.
(t) Not correct. The said items were imported in violation of the concessionary SRO/Notification, therefore correctly and lawfully has been decided by the Collector (Appeals).
(u) Not correct. The order-in-Appeal has been issued discussing all the issues raised by the appellants during the course of hearing proceedings.
(v) Same as above.
(w) Lastly he prayed to dismiss the appeal.
8. Rival submissions heard. Case record examined. Poliowing observations are made by this forum:--
(i) The appellants are assemblers of Honda Automobiles and are working under a deletion program issued by the Ministry of Industry duly approved by federal Board of Revenue, Islamabad.
The concessionary SRO 502(I)/04 dated 09.6.1994, governs the import of various parts components and subcomponents imported by them. These items can only be imported under the concessionary regime if they are not locally manufactured in terms of Customs General Order No. 07/1998.
(ii) A case of evasion of customs duty and taxes was instituted against the appellant and a show cause notice was issued to them for making payment of Rs. 90800000/-. The appellant vehemently contested the show cause notice and made certain preliminary objections. The appellants inter alia stated that as per policy of Federal Board of Revenue dictated from time to time Customs General Orders are not applicable regarding locally manufactured items where foreign parts are imported under Deletion Program duly approved by Engineering Development Board.
(iii) In either case no loss of revenue to Government Exchequer has incurred since the normal tariff on imported items was 35% ad valorem being equivalent to the concessionary regime also attracting the duty at 35% ad valorem.
(iv) The importer based their arguments on a few judgments of Honourable Supreme Court which state that it is necessary for an item to be included in the list of locally manufactured goods that the item was being manufactured in Pakistan during the relevant period when the subject import was made by the appellant.
(v) The appellants referred to three lists (A, B&C) issued under Industry Specific Deletion Program (ISDP). In fact the ISDP is a reference document indicating the particular state of industry and targets under deletion to be achieved by the relevant manufacturer.
(vi) The Department did not take into consideration the items in respect of which allegation of evasion of customs duty have been leveled in terms of SRO and CGO 7/98 are mentioned in the list
(C) of ISDP in the relevant period since the items listed therein are undeletable due to non availability of the manufacturers in Pakistan. The said allegations become redundant.
(vii) The appellants referred to EDB's classification dated 15.6.2007 No. EDB/TPS-I/07 which in unequivocal terms states that EDB is of the opinion that as per. The establishment principle, CGO No.7/98 will not apply to imports made by M/s. Atlas Honda Cars Limited under their respective USDP (Unit Specific Deletion Program) approved by EDB and validated by FBR.
(viii) The appellants also referred to FBR's Circular C. No. (88) Mech/84/AC 1/26.5.1994 addressed to all field officers that the import of component parts was allowed under deletion program. After consideration of the capability and potential of local manufacturers and the indiscriminate application of CGO 9/92 (the predecessor of CGO 7/98) was defeating Government efforts to encourage indigenization and transfer of technology. The said circular further states that the Board is pleased to order that CGO 9/92 will not apply to imports made in case where deletion programs and import of specific items are allowed. The same principle was reiterated by the FBR in its letter C. No. 1(26)SNR- 284 dated 10.6.2002 addressed to Collector of Customs Lahore.
(ix) The appellant also referred to EDB's letter No. EDB-005/03/04 dated 11.10.2004 whereby the EDB with reference to the present case specifically clarified that the imports are to be monitored against deletion program issued by endorsement No. 2282 dated 23.4.2003 and 2384 dated 23.7.2003 for Honda Civic and City respectively.
(x) The appellants further emphasized that the defaulted percentage in the annual indigenization target will be determined in the indigenization Committee.
9. A scrutiny of the above factual and legal factors raised by the appellant's advocate and noted by this forum indicates that both the forums below have not taken, into consideration the documents produced by the appellants with particular reference to approved deletion program ISDP's and clarifications made by EDB and Federal Board of Revenue. The clarification regarding application of C.G.O. 9/92 (the predecessor of C.G.O. 07/98) by the department for determining default allegedly committed by the appellant which, is refuted by the appellant in wake of EDB's and Federal Board of Revenue's clarifications on record and which are contradictory to the departmental stance. The respondent is directed to get the position reconciled from Federal Board of Revenue. These points need serious consideration for a judicial decision of the subject case. As such the orders passed by the forums below are hereby set-aside and the case is remanded to the officer of original jurisdiction to consider the matter de novo on merits in the light of the documents on record after award of a personal hearing to the appellants. The matter may be preferably decided through issuance of a well reasoned speaking order within three months of the date of issuance of this order.