The appellant through this appeal has objected against the impugned Order-in-Appeal No.497 of 2009. Dated 26-9-2009 passed by the Learned CIR(A) in respect of Order-in-Original No.420 of 2009 dated 25-2-2009. The following grounds and prayers have been framed by the appellant: "(1) That the impugned Order-in-Appeal No.497 of 2009, dated 26-9-2009 is bad in law and on facts of the case as the relevant provision of the Federal Excise Act, 2005 and Rules made thereunder do not provide for imposition of FED on foreign commissioner received from foreigner principals operating in foreign countries.
2. That the learned Collector (Appeals) has. Erred and misdirected himself by holding that FED is levy able on the amount of commission received in foreign exchange from foreign principals on services that were handled by them and that originated and terminated outside Pakistan in USA or Middle East. The appellant rendered the tail end services of handing over equivalent amount of Pak Rupee at its counter to the nominee of foreign remitter in Pakistan on behalf of its foreign principals during the relevant period (July 1st, 2006 to June 30th, 2007). The fact that the principal service providers are ,foreign companies stationed in USA or Middle East that remit commissions to the appellant as has been duly refected in the audited financial statement of the company supported by copy of appellant's agreement with its foreign principals and the relevant evidences were provided during the course of proceedings at original stage as well at the appellate Stage.
(3) That, notwithstanding the facts in paragraph 2 above, the learned Collector (Appeals) has further misdirected himself by observing and holding that it can levy Fed on the Appellant (an exchange company) on the pretext that similarly placed persons (exchange companies like the Appellant) whose names were mentioned in the order in original had paid FED on commission earned by them, without disclosing whether these had been received in Pakistan or from abroad and against money gram or DDs, but merely presuming and assuming that the commission received by the appellant was from same, type of services. That the so called presumption and assumption of the learned Collector with respect to the persons named in the order in original that they earned commission for providing same type of service thereby creating charge of FED is not sustainable under the law which provides charging section 3 for the purpose of levy of FED on commission.
(4) That the learned Collector (Appeals) has erred in holding retrospective applicability of remedial/curative legislation as not relevant to the facts of the case, ignoring the judgments of higher judicial forum that always favored the applicability of remedial and curative legislation in such cases and the Collector (Appeals) was duty bound of apply such decision on this issue. There is plethora of cases elaborating the principle of curative and remedial legislation.
(5) That the Department may kindly be directed to refrain for initiating coercive means of recovering FED which had been levied without the sanction of law and procedure there-under.
(6) The appellant craves for the relief that, the unlawful levy of FED of Rs.392,839 be deleted in the interest of justice and fair play.
(7) The appellant craves for any other relief which is considered fit and lawful by this Honorable Court.
(8) That the appellant further craves to amend, modem or and any ground of appeal before the hearing or at the time of hearing of appeal.
PRAYER. (a) it is therefore, prayed in the interest of natural justice that the Honorable Appellant Tribunal, Customs, Central Excise and Sales Tax, Karachi Bench may be pleased to accept this appeal and set aside the impugned Order-in-Originab No.497 of 2009 dated September 26th, 2009.
(b) It is further prayed that during the pendency of the appeal this Honorable Court may be pleased to Pass on order prohibiting the respondent from taking any adverse action against the appellant.
(c) Set aside the impugned order and vacate the demand of Federal Excise, default surcharge and penalty payable thereunder.
(d) The appellant has been aggrieved by the impugned order passed by the learned Collector of Customs, Sales Tax and Federal Excise (Appeal), Karachi and the appellant has a strong case made out and pray for grant of stay of proceedings which if not granted will frustrate and render negatory the entire purpose of the appeal.
(e) It is prayed that in the interest of justice, the stay be granted against proceedings initiated or to be initiated till the disposal of the appeal."
2. None has appeared on behalf of the department, we have heard the learned representative of the appellant and have also perused the impugned order in appeal, the order in original and other relevant available record of the case.
Briefly facts of the case as reported are, that in pursuance of a. Credible information to the effect that the appellant have not paid the Federal Excise Duty on excisable services i.e. Commission/ brokerage falling under PCT heading 9813.0000 during the period from 1-7-2006 to 30-6-2007, he was asked through letter dated 6-11-20007 to provide certain information/data of commission received on account of foreign exchange. On receipt of annual accounts for the year 2006-2007 along with their letter dated 13-11-2007 and to facilitate the payment without going into litigation the, appellant company vide letter dated 26-11-2007 was asked to pay the Federal Excise Duty amounting to Rs.392,839 on commission the Rs.7,856,773 received during years 2006-2007. In this respect the letter dated 22-1-2008 and 20-3-2008 were also sent but no response was made by the appellant as per the order-in-original. Subsequently the show cause notice dated 19-1-2009 under section 4 of the Federal Excise Act, 2005 was sent which was duly replied by the appellant but adjudicating authority being dissatisfied with the reply of the assessee ordered, for recovery of the Federal Excise Duty amounting to Rs.392839 along with default surcharge in terms of section 14 and also imposed penalty of Rs.10,000 under section 19(1) of the Federal Excise Act, 2005 for the violation of the above said section. Against which the assessee filed first appeal before the learned CIR(A) which has also 'been dismissed hence this appeal before this Tribunal.
3. The learned counsel representing the appellant has contended that neither the show cause notice in this case was prepared with care nor the impugned orders in original and appeal were written attentively which are therefore liable to be set aside. He has contended that the order-in- driginal is not a speaking order and makes no mention of any provision or general order of the Federal Excise Act, 2005 that counters the submissions made by the appellant or stand to declare the transactions completed in foreign exchange as carried out by the appellant or excisable the part of which is performed by the appellant. According to Learned Counsel the impugned order is not tenable and not in accordance with the provision of subsection (1) of section 3 read with clause
(c) of subsection (5) of section 3 that fixes the liability in respect of payment of duty to be that of the recipient or such excisable services in Pakistan as the recipient of services is resident abroad.
He has submitted that the recipient of the subject services happens to be in non-tariff area outside Pakistan and deals directly with Western Union or Habib Express without any interference of the appellant that only handles the local delivery in cash. He has contended that the impugned order- inoriginal is baseless and arbitrarily passed so far as does not take into cognizance the fact that the commission on services specified at serial No.9 in the. Table II to the 1st Schedule read with Rule 40B has nothing in common with the commission on services of the appellant in view of the customer being situated outside the Pakistan and is not a person who could be subject to any duty or even charge of commission or brokerage by the appellant and therefore obviously qualify for exemption in the terms of the provision of section 16 of the Act. He has argued that both the officers below have ignored all facts narrated by the appellant with respect to the subject transaction that originated as well as terminated outside Pakistan and as such do not qualify as excisable services as defined in subsection (23) of section (2) read with subsection (17) of section 2 as Western Union and its customer originate and terminate the same duty outside Pakistan with their customer and close it completely there leaving only handing over cash in Pakistan Rupee to the recipient for appellant. The learned counsel has also reiterated the above referred grounds of appeal which required no need to be reproduced again. On the other hand none has appeared on behalf of the Respondent/ Department.
4. We have considered the arguments put forth by the learned counsel of the appellant. We are of the view that the main contention of the learned counsel of the appellant in this case is that the excise duty has been charged by the adjudicating authority regarding the period 1st July 2006 to 30th June 2007 for the reason that the services rendered by the appellant comes under the provisions of Federal Excise Duty which has not been paid. The learned counsel has contended that during the above mentioned period there was no Federal Excise Duty on these services. It has further been contended that these services have not been generated in Pakistan as the remittances or the commission was received in USA or Canada and no any transaction was in Pakistan. In this regard subsections (1)(d) of section 3 of the Federal Excise Duty as was applicable at that time has been referred according to which the duties specified in the 1st Schedule to be levied were, "regarding the services, provided or rendered in Pakistan" as has been mentioned in sub-clause (d) of subsection (1) to section 3. It is contended that subsequently through Finance Act, 2008 the above referred subclause (d) of subsection (1) of section 3 has been substituted including the services originated outside but rendered in Pakistan. We find force in the contention of the learned counsel that the case of the assessee being for the period prior to the substitution of the said clause, the said clause is not applicable to the appellant. In this respect Rule 40B of the Federal Excise Rules, 2005 has been referred which is also been omitted by Notification No.S.R.O.
656(1)/2007 dated June 29th 2007, according to which special procedure for collection of excise duty on services provided by foreign exchange dealers including exchange companies and money exchanger were provided. On behalf of the appellant it has been contended that this rule was also not applicable to the, appellant. Keeping in view the above referred legal position and facts and circumstances of the case we fined no justification for the levy of Federal Excise Duty. We find that the learned CIR(A) has rejected the version of the appellant with the reason that the law clearly provides that the kind of services provided by the appellants are subject to FED and similarly placed persons are paying FED on the same type of services provided by them. But this contention of the learned CIR(A) has been vehemently controverted by the leaned counsel of the appellant.
He has contended that none of such company is paying FED. Likewise we find no justification in observation made by the learned CIR(A) in respect of retrospective applicability of the remedial/ curative legislation as in this case the substitution in clause (d) taking the "services provided in Pakistan including the services originated outside but rendered in Pakistan" has been made through Finance Act, 2008 which can in no way, be made applicable to the case of the appellant which is regarding period of 1st July, 2006 to 30-7-2007. The impugned order of the learned CIR(A) in this respect is therefore, vacated and the order in original is cancelled.
The appeal filed by the Taxpayer is allowed. :