' WAQAR AHMAD SETH, J.---Collector of Custom, Model Custom Collectorate, Peshawar, petitioner herein, has filed the instant Custom Reference to answer the following questions of law:- "1. Whether as per facts and in the circumstances of the case, the rubber waste/tyre scrap in shredded form has been specifically defined as input goods under Rule 296(1) (i) of S.R.O.
450(1)/2002 to enjoy DTRE (Duty and Taxes Remission for Exports) facilities?
2. Whether as per facts and in the circumstances of the case, the disputed import made by respondent was in violation of DTRE Rule 297(2)(b) read with Rule 296(1) (i) and Paragraphs 6 and 11 of the Import-Policy Order, 2009 amended through S.R.O. 1119(1)/2011 dated 28.12.2011?
3. Whether as per facts and in the circumstances of the case, the respondent has obtained any permission, consent and approval from competent authority to import and consume rubber waste/tyre scrap in shredded form in view of Federal Tax Ombudsman Findings dated 21-10-2011 and in accordance with Basel Convention?
4. Whether as per facts and in the circumstances of the case, the respondent has complied the Guidelines regarding permission to Import TDF issued by the Environmental Protection Agency (PEPA), while importing rubber waste/tyre scrap in shredded form for DTRE facility?
5. Whether as per facts and in the circumstances of the case, the restriction imposed through S.R.O.
1119(1)/2011 dated 28-12-2011 amending paragraph 11 of S.R.O. 766(1)/2009 dated 4th September, 2009 is applicable to the imports of rubber waste/type scrap in shredded form made by the respondent from 1-3-2012 to 30-1- 2013?
6. Whether as per facts and in the circumstances of the case, the respondent has complied with the direction issued by. Environmental Protection Agency (PEPA), Ministry of Climate Change, Islamabad contain in Guidelines for Using "TDF" (Tire Derived Fuel) in Pakistan Cement Agency while importing rubber waste/tyre scrap in shredded?
7. Whether as per facts and in the circumstances of the case, rubber waste/tyre scrap in shredded fans can be considered as input goods according to Rule 296(I)(i) and Rule 297 of S.R.O.
450(1)/2001 ?
2. Brief facts of the case are that during the course of audit by an audit team of Directorate General Internal Audit (Customs) Islamabad, it was observed that "Rubber wastage/Tyres scrap (cut into pieces/ shredded- HS Code 4004.0090" involving duty and taxes of Rs,89,984,816/-, for which, Duty and Taxes Remission for Exports (DIRE) approval was given to Messrs Lucky Cement Ltd, 58th KM, .
Super Highway, Karachi, was not covered within the definition of "input goods", as such, show cause notice was issued to the respondent, which was replied to and the learned Adjudicating Officer, after hearing the parties, passed the following order vide order-in-original dated 1.4.2014, which reads as under:-- "In view of the above situation, it is clear that this show cause notice is not maintainable in its present form as the vital aspect of the issue of determination of liability, if any, in consequence of FBR's above directive, has not been settled and no liability can be imposed upon a tax payer because of a disagreement between two internal departments of Customs working under the FBR.
Accordingly, the Collector, MCC, Peshawar is directed to comply with the directions of the Board to decide the whole matter in consultation with PEPA (Ministry of Climate Change), All Pakistan Cement Manufacturers Association and the Directorate General, Internal Audit (Customs), Islamabad and to proceed thereafter, appropriately in accordance with the conclusion reached.
The case is disposed of accordingly".
3. Feeling aggrieved from the above said order-in-original, the petitioner filed appeal before the Customs Appellate Tribunal, Islamabad, who, after hearing the parties, dismissed the same vide order dated 23.10.2014; hence, the instant Customs Reference.
4. Arguments heard and record perused.
5. In order to understand and decide the question of law so formulated, it would be appropriate to go through the definitions of Rule-296 of Duty and Tax Remissions for Exports Rule 297 and S.R.O. No, 1119(1)/2011 and S.R.O. No, 766(1)/2009, which reads as under:-- 296-.Duty and Tax Remission for Exports; (1) In this sub-Chapter, unless services eligible for acquisition and also includes, - (a)
(i) "input goods" means goods and includes services eligible for acquisition and also includes,-
(a) trims and accessories;
(b) electricity and gas on which sales tax has been paid; and
(c) furnace or diesel oil for the generation of electricity used or consumed in the manufacture of output goods for export under this sub-chapter;
297. Scope of DTRE facility. (I) ......
(2) The DTRE facility under this sub-Chapter shall not admissible to, --
(a) and
(b) the goods which are banned or restricted under the prevalent import and export policy orders on account of national security public health and cultural moral or religious considerations.
' That it was also opined that the restriction imposed through S.R.O. Paragraphs 6 and 11 of S.R.O.
766(1)/2009 dated 4th September, 2009 (Import Policy Order, 2009) amended through S.R.O.
1119(1)/2011 dated 28.12.2011 is applicable to the imports of rubber waste/tyre scrap in shredded form made by the respondent from 1.3.2012 to 30.1.2013. Paragraph 11 of S.R.O. 766(1)/2009 and amendment brought through S.R.O. 1119(1)/ 2011 are reproduced hereunder:- ' Paragraph 6. Prohibition and restriction imposed under other laws. - ' Notwithstanding anything contained in this order, the prohibitions , restrictions, conditions and requirements as prescribed under any other law or rules for the time being in force, shall be applicable, mutatis mutandis, on specified imports.
' Paragraph 11. Import of inputs by manufacturers-cum-exporters; ' The export houses, manufacturing bonds and exporters operating under Manufacturing in Bonds, common Bonded Warehouse, Duty and Tax Remission for Exports (DTRE) of the Custom Rules, 2001, and temporary importation scheme governed' through Notification No, S.R.O. 492(1)/2009 dated the 13th Juhe, 2009 shall be allowed to import items actually required for production of export items, except items mentioned in Appendix-A, B & C. However, manufacturers of regenerated Polyester Staple Fibre (PSF) are allowed temporary import of polyethylene terephlate (PET), bottle scrap (HS No, 3951..9000), if imported under. DRT scheme subject to certificate from the exporting country that the scrape being exported does not includes hazardous waste as defined in Basel Convention. S.R.O. 766(1)/2009. However, units registered under DTRE scheme shall be eligible to import input items listed in Appendix B subject to the fulfilment of the condition mention therein.
S.R.O. 1119(1)/2011.
6. The above referred rules and SRO's clarifies that "rubber waste/ tyre scrap, cut into pieces/shredded form cannot be considered as input goods, hence the grant of DTRE approval of Ms LuckS, Cement do not fall under the relevant rules.
7. Guidelines issued by Pakistan Environmental Protection Agency for using tyre derived fuel (DTI;) in Pakistan Cement Industry dated 11th September, 2011, the import of scrap tyre by Cement Industry has been restricted unless the consent of relevant Environmental Agency is obtained, in this respect, the extract of the para of the guidelines issued by Pakistan Environmental Agency reads as under:-- "The import in the country is governed by the Import Policy as announced by the Federal Government from time to time and the International Conventions and protocol to which Pakistan is a party. No cement unit is allowed to import or use TDR without obtaining consent from concerned Environmental Agency and the Designated National Authority (DNA) of the related international convention/protocol. The following criteria and standards shall apply to award consent to the cement unit desirous to import or use TDR in the country."
8. In addition to this above quoted paragraphs 6 and 11 of S.R.O. 766(1)/2009 dated 4th September, 2009, commonly known as Import Policy Order, 2009 also refers to restriction observed and imposed by Basel Convention which reads as under:-- "The overarching objective of the Basel Convention is to protect human health and the environment against the adverse effects of hazardous wastes. Its scope of application covers a wide range of wastes defined as "hazardous waste" based on their origin and/or composition and their characteristic.
' The provisions of the Convention focus around 'the following principal aims: ' The reduction of hazardous waste generation and the promotion of environmental sound management of hazardous wastes, wherever the place of disposal; ' The restriction of trans boundary movements of hazardous wastes except where it is perceived to be in accordance with the principles of environmentally sound management and; ' A regulatory system applying to cases where trans boundary movements are permissible.
9. The above referred and quoted Rules, S.R.O. And Policy, it is quite clear that the disputed, imported, rubber wastes/tyre scrap in shredded form has not been specifically defined as "input goods" nor the respondents company has complied with the provisions of mandatory requirements, in view of which the question of law so formulated are answered as under:- ' Question No, 1, decided in negative, accordingly.
' Question No, 2, Yes, the import made by the respondents is in clear violation of DTRE Rules, Rule- 297(2)(b) with Rule-296, as well as in violation of paragraphs-6 and 11 of the Import Policy Order, 2009.
' Question No,3, in negative as there is nothing on record that respondents had obtained any permission, consent and approval from competent authority to import and consume rubber wastes/tyre scrap in shredded form.
' Question No,4, decided in negative, as respondents had not complied with the guidelines as provided.
' Question No,5, Affirmative, the restrictions imposed through SRO and amended paragraphs are applicable to the import of said disputed rubber wastes for the period 1.3.2012 to 30.1.2013.
' Question No, 6, as formulated the respondents has not complied with the directions of the Environmental Protection Agency contained in TDF for the particular purpose.
' Question No, 7, it is held that the rubber wastes/tyre scrape in shredded form cannot be considered input good according to Rule 296(I)(i) and rule 297 of S.R.O. 450(1)/2001.
10. In view of above this reference is allowed, the judgment/order dated 23.10.2014 of the Custom Appellate Tribunal passed in Custom Appeal No, 168/PB/2014 along with Order-in-Original No, 65 of 2014, dated 1.4.2014, are set aside, in above terms.
Reference altered.