JAMAL KHAN MANDOKHAIL, C.J.---- The above titled petitions having identic al issue, therefore, we intend to dispose of them through this common judgment.
Facts of the case are that the petitioners imported re-ro 1 lable scrap and have submitted their Goods Declaration
(GD) on 2nd October 2019 before the Customs Authority . The goods were cleared by the respondent No.5, but subsequently the preventive customs seized the goods through seizure cum contravention report dated 7th October 2019, alleging therein that on examination, it revealed that the consignment comprises of iron and steel bars cut into specific length (Prime Quality) of Iran origin, falling under PCT Heading 7214.2090, which have been mis-declared and cleared as re-rollable scrape under PCT Heading 7204.7910. The goods of the petitioners have been seized through separate seizure cum contravention report, therefore, feeling aggrieved, the above titled petitions have been filed.
2. As clarification and interpretation of the Rules, Import Policy and Instruction of the Federal Board of Revenue (the Board) is involved, therefore, notice was issued to the learned Attorney General, the Chief Collector Customs Balochistan, the Collector Appraisement Customs and the Collector Preventive Customs Balochistan. The learned Attorney General did not appear , however the learned DAG holding brief on his behalf. The officers appeared along with their counsel and submitted para-wise comments supported by relevant documents. The respondents raised an objection with regard to maintainability of the petition, on the ground that the goods have been seized and adjudication proceedings have been started, against which, the petitioners have a remedy under the Customs Act, 1969 and they may avail such remedy . The learned DAG and the learned counsel for the respondents stated that the petitioners have imported prime quality goods, which do not fall within the definition of scrap. They stated that Rule 592 of the Customs Rules, 2001 (the Rules), clearly indicates that mutilation and scraping of goods can only be allowed if the same are in old and used condition. According to them, the aforesaid facility is not admissible for new imported goods. The respondents alleged that new goods shall be cleared on payment of duties and taxes as charge-able on new items. According to the learned DAG and the learned counsel for the respondents, though the goods imported by the respondents are in pieces, but the same are since unuse d and new, therefore, they are categorized as a Prime Quality , hence were seized. They relied upon the letter dated 18th September 2019 of the Board and alleged that the Board has excluded new and unused goods from the category of scrap, whereas the customs authorities are bound to follow-the instructions of the Board.
3. The learned counsel for the petitioners opposed the contention and stated that the respondents are misinterpreting the provisions of section 27-A of the Customs Act 1969, Rule 592 of the Customs Rules, 2001 and the Import Policy , therefore, these petitio ns have been filed to clarify the anomaly , which cannot be done by the forum below . The learned counsel added that the respondents have since misinterpreted the relevant provision of law, therefore, they have wrongly seized the goods, considering them as Prime Quality (new), as such, these petitions have been filed instead of availing the remedy under the Customs Act. The learned counsel stated that the respondents are relying upon the above referred letter of the Board, which is again st the relevant provisions of law, Rules and the Policy , interpretation whereof is only in the domain of this Court, therefore, any adjudication proceedings initiated against the petitioners will have no effect upon these petitions. The learned counsel stated that actually the law Rules and the Policy do not exclude new items from the category of scrap provided that the same do qualify the test of the Rules and the Import Policy . He stated that actually the goods in question are scrap, which are not in serviceable condition, therefore, irrespective of its being old or new, it shall be considered as a scrap, as such, the importers are entitled for the facility as provided by Rules 592 of the Rules.
4. Arguments heard and the relevant provisions of the law as well as the record perused. The letter/Instruction dated 18th September 2019 of the Board is a sort of interpretation of the Act. It is important to mention here that interpretation of a statute does not come within the jurisdiction of the Executive, rather it is for the Superior Courts to interpret the law. Since interpretation of Rule 592 and the letter in question is required in the light of the Act, therefore, the forum provided by the Customs hierarchy cannot do so. Under such circumstances, the petitions are competent to invoke the jurisdiction of this Court conferred upon it under Article 199 of the Constitution.
5. The issue involved in these petitions revolve around section 27-A of the Customs Act, which is reproduced herein-below: "27A Allowing mutilation or scrapping of goods.--- At the request of the owner the mutilation or scraping of goods as are notified by the Board, may be allowed, in the manner as prescribed by the rules and where such goods are so mutilated or scrapped they shall be chargeable to duty at such rates as may be applicable to the goods as if they had been imported in the mutilated form or as scrapped."
According to the above provision of law, the importers are permitted mutilation and scraping of goods notified by the Board, in the manner , as prescribed by the Rule 592 of the Customs Rules, 2001, as under: "592. Goods allowed for mutilation or scrapping.--- The following old and used items, if imported in serviceable condition along with the scrap consignments or imported separately as a scrap and found serviceable, may be allowed mutilation or scrapping, as the case may be, within the meanings of section 27A of the Act, namely:-
(i) Pipes or tubes;
(ii) Bars or rods;
(iii) Sheets or strips, slab, plates;
(iv) Beams, sections, channels or girders, used and pitted railway tracks; [and]
(v) Ship plates cutting of various sizes with rough edges and having welded joints; 1;]
(vi) Foils or films;
(vii) T yres or tubes 1; and]
(viii) Front Cabin/half Cut HTC/L TC/Cars, with or without chassis number for which Master bills of Lading were issued up to fifteenth July , 2017]."
As Section 27-A of the Act, empowers the Board to notify the goods to be permitted to be mutilated and scrapped, therefore, the Board issued the letter dated 18th September 2019, titled as CORRECTION OF ANOMAL Y BY THE REMOV AL OF WORD "OR" FROM SRO 250(1)/201 1, which is reproduced hereunder: "I am directed to enclose Pakistan Association of Large Steel Producers' letter dated 25.06.2019 and to say that in continuation of the same, the representa tive of the Ship Breakers Association during their meeting with Member Customs (Policy) have made a representation regarding the misuse of facility of mutilation and scrapping as envisaged in rule 592 of the Customs Rules, 2001 by clearance of steel bars/steel girders/channels/sheet bars in new/unused condition in the garb of re-rollable scrap. The association has further attributed this practice to the facility available for mutilation of consignments imported as scrap and found as a whole to be in serviceable condition.
2. Perusal of the mutilation and scrapping rules clearly indicates that mutilation or scrapping of goods listed in rule 592 can only be allowed if the same are in old and used condition and fund to be serviceable, whether as a part of scrap consignment or consignment as a whole. The aforesaid facility is not admissible if these items are imported in new condition as a part of scrap consignment or separately , as a whole consignment, which shall be cleared on payment of duties/taxes as chargeable on new items.
3. the existing mutilation or scrapping of goods rules notified vide Chapter XXIV Customs Rules, 2001, may also be examined with a view to propose any amendment to forestall any misuse of the facility ."
6. According to para-wise comments subm itted by the respondents, arguments advanced by the three officers and their counsel and the referred letter of the Board, if the imported goods are new and unused, the importer cannot get the benefit of Rule 592 of the Customs Rules, 2001, even if the same are scrap or are unserviceable, whereas, the petitioners claims that this interpretation of the respondents is contrary to section 27-A of the Act. Section 27-A of the Act permits the importers/owners to mutilate and scrape the goods, notified by the Board, in a manner as prescribed by the rules. This provision of the Act simply speaks about the mutilation and scraping of goods in general, to make them in mutilated form and as scrapped. There is no description or restriction regarding the status of the goods, before making them mutilated or scrapped. The condition attached to mutilation and scraping of goods is that the same should be amongst the goods, as notified by the Board and its mutilation and scraping may be done in the manner , as prescribed by the rules and Import Policy .
7. Mutilate means to damage somethin g severely , especially by violently remo ving its part, so as to make it unserviceable. Scrap is a waste that either has no economic value or the value of its basic material content is only recoverable through recycling. Thus, if any serviceable goods is made permanently unserviceable, it becomes less valuable, irrespective of the fact that before mutilating and scraping, the goods were old or new. Devaluation is the deliberate downward adjustment of the value of the goods. The purpose of mutilating and scraping or serviceable goods is to convert them into unserviceable condition. Permitting mutilation and scrapping of imported goods, which are ordinarily used for more than one purpose so as to render them unfit for one or more or such purposes; and where any goods are so mutilated, they are deemed to have been imported in the mutilated form. That is why the lawmaker did not impose a condition of mutilation and scraping of old, new, used or unused goods. Even otherwise, it is very difficult to describe a particular goods us old or new, therefor e, that might be also one of the reason that the lawmakers did not limit mutilation and scraping of goods, only to the old and used ones. It seems that insertion of section 27-A in the Act, was with a purpose to restrict import of serviceable goods in the garb of scrap. Had the intention of the lawmakers been to permit mutilation and scraping or only old and used goods, it should have specifically been mentioned in the Act. Since, after mutilation and scraping, the nature of serviceable goods changes into un-serviceable goods, therefore, the lawmakers did not feel necessity of using the words "new , old, used or unused". It is the Import Policy that describes the goods, having width not exceeding 1000 Millimeter with thickness 6 mm and above and a length not exceeding 2.5 meters. consisting of mills rejects and crops ends of ingots, billets, slabs, blooms and including cuttings of sheets and plates, pipes and bars whether in pieces or in rolled strips, cuttings of ship plates, used and pitted rails and girders, whereas in case of girders and pipes length shall be 1.5 meters, as re-rollable scrap. The policy also did not use the words "used, unused, old or new", which also confirms the intention of the lawmakers.
8. It is important to mention here that rules are always framed to regulate, to give effect, to clarify , to demarcate or to interpret laws. To give effect to section 27-A of the Act, in Rule 592 of the rules, the words "old and used condition" were incorporated. Similarly , in the letter of the Board referred herein above, the words "new/unused condition" as well as the words "old and used condition" are mentioned. Law is something that has been passed through the legislative process. By contrast, rule is something that has been created by the executive, by exercising power conferred upon them by the law. Thus, the law carries more weight, which will prevail, as such, the rules must not be in conflict, in contrast or in contravention of any provision of an Act nor B should the rules change its nature. It is a settled principle, that when a law prescribes a thing to be done in a particular manner , it should be done accordingly . Section 27-A describes that mutilation and scrapping of goods may be allowed in a manner as prescribed by the rules. The Act allows that a manner of mutilating and scrapping of goods should be prescribed by rules, but it does not perm it the executive to add anything in the rules, which is not the intention of the Act. By adding the words "old and used items" in the Rule 592 as a condition for mutilation and scrapping, the executive have exceeded their authority , which is an illegality . Under such circumstances, the words "old, used, new and unused" incorporated in Rule 592 and in the letter , are contrary to the theme of Section 27-A of the Act.
These extra Words used in the rules changed the nature of section 27-A of the Act, which cannot be done.
Moreover , insertion of these words in the rule and in the letter is illogical, because after mutilation and scrapping, nature and status of the goods altogether change, therefore, no purpose would be served to impose a condition; therefore, the same cannot be enforced.
9. In the case in hand, the goods so impo rted by the petitioner 'were seized declaring them as Prime Quality Scrap (new and unused) by the Customs officials. The Prime Quality Scrap means clean, pure metal that is leftover after certain type of new production, which is available in all .sorts of different shapes, sizes and color . The Customs authorities have themselves declared the goods so imported as scrap then irrespective of its description as new, unused or of prime quality , it cannot be used for a purpose, as it was before scraping. The goods were since deliberately made less valuable, therefore, irrespective of the same being new and unused, its status remains as scrap. Since there is no condition of old and new goods in section 27-A of the Act for the purpose of their mutilation and scraping, therefore, declaring the goods of the petitioners as Prime Quality and seizing them, is contrary to Section 27-A of the Act, which is an illegality . It is important to mention here that the mutilated and scraped goods are allowed to be imported provided that the said goods fulfill-the test of Import Policy .
Thus, in view of above, the petitions are allowed. The respondents are directed to release the goods so imported by the petitioners, if the same do not contravene the provisions of the Customs Act, the Rules, the Import Policy or directions of the Board, keeping in view the above clarification.