AYESHA A. MALIK, J.---- This single judgment decides upon the issues raised in W.P.Nos.13728 and 12697 of 2011 and Crl. Org.No.660-W of 2013 as common questions of law and fact arise in these petitions.
2. The Petitioner is a pharmaceutical company and has prayed that it be granted the benefit of SRO 575(1)/2006 ("SRO ") dated 05.06.2006 and that letters issued by Engineering Development Board, Respondent No.3 dated 17.02.201 1, 25.02.201 1 and 09.06.201 1 be declared illegal and unlawful having no legal effect against the Petitioner .
3. The case of the Petitioner is that it is engaged in the business of manufacturing, selling and distribution of pharmaceuticals drugs and other ancillary products. The Petitioner manufactured Co-Amoxiclav for which customized Air Handling Units ("AHUs ") are required to control-temperature, humidity and pressure level. As per the understanding of the Petitioner the AHUs required by it are not locally manufactured. The Petitioner made various attempts to find a local manufacturer and supplier , who could provide the AHUs of the requisite specifications, however , to no avail. The Petitioner therefore, imported AHUs in October , 2010 at which point the Petitioner sought the benefit of the SRO. This was denied on the ground that the product was manufactured locally , hence the Petitioner could not avail its benefit.
4. Learned counsel for the Petitioner argued that the product is not manufactured locally and this fact was ascertained by the Petitioner prior to the import on the basis of letters dated 25.04.2009 and 13.10.2009 issued by Respondent No.2 wherein Respondent No.2 admitted that the AHUs of the specification required by the Petitioner are not manufactured locally . Learned counsel further argued that the Respondent s have denied the Petitioner the concession under the SRO essentially on the ground that local companies have the capacity to manufacture the AHUs of the specification required by the Petitioner . However , he stated that no physical verification of this capacity was ever made by Respondent No.2, therefore, he argued that Respondent No.2 does not have actual knowledge of this fact and on the basis of the statements of some local manufacturers they are now insisting that the AHUs received by the Petitioner are manufactured locally . Learned counsel further argued that in this regard a meeting was held in the presence of Respondent No.2 with local manufacturers, who confirm that they do not manufacture the required AHU locally . He has placed reliance on letters dated 05.03.201 1 and 21.02.2131 1 issued by Habibullah Industries (Pvt.) Ltd. and AGECO (Pvt.) Ltd. respectively . Learned counsel argued that a request was made to Respondent No.2 vide letter dated 13.05.201 1 that those suppliers, who claimed that they have the capacity to make the AHUs should be physically verified by a technical team of Respondent No.2 as the Petitioner was of the opinion that the AHU it required was not locally manufactured. Learned counsel argued that on 17.05.201 1 at a meeting, Respondent No.2 concluded that the AHU is a customized produc t and local manufacturers are technically capable of manufacturing the AHUs which are required by the Petition er. Learned counsel argued that this statement was made without any physical verification and without conducting any independent inquiry into the matter . Again another meeting was held on 09.06.201 1 wherein some local manufacturers again confirmed that they were making AHUs with Plug Fan and VFD required by a Petitioner and other pharmaceutical firms were being imported by it as a component. Learned counsel argued that the Petitioner is entitled to the benefit of stated SRO as the product is not locally manufactured and Respondent No.2 claims that it is manufactured locally is not based on any tangible evidence.
5. Report and parawise comments have been filed by the Respondents. It is the case of CEO EDB and Technical Manager of Respondents Nos.3 and 4 that the AHU required by the Petitioner is a customized product, which can be manufactured in Pakistan. They stated that earlier in the year 2009 it was on a one time basis that Respondent No.2 stated that the AHUs were not locally manufactured. However , subsequently , local manufacturers have surfaced, who have the capacity to make the AHU required by the Petitioner . They specifically referred to a letter of Cool Point (Pvt.) Ltd. dated 04.01.201 1 and relied upon minutes of the meeting dated 08.06.201 1 to urge the point that Cool Point (Pvt.) Ltd. has categorically stated that it can manufacture the product and in this regard, it is willing to give a performance guarantee. He further stated that it was incumbent upon the Petitioner to check with Respondent No.2 first as to whether the product is being locally manufactured. Instead, the Petitioner without reference to Respondent No.2 imported the machinery and is wrongly seeking the benefit of the SRO. CEO EDB stated that AHUs are listed at serial No.5 04 of. Customs General Order No.11/2007 ("CGO") as they are locally manufactured and the names of two manufacturers are specifically provided therein. He stated that this CGO is not an exhaustive list and there are other manufacturers of this product. He explained that several meetings were held wherein the local manufacturers categorically stated that they have the capacity to manufacture the AHU required by the Petitioner . It was their opinion that they are required to ascertain the capabil ity and the actual manufacturing of the product was not necessary . In this case, there was no need for physical verification because the capability of the local manufacturers was based on the information provided in the various meeting held by them. Hence they were of the opinion that the AHU required by the Petitioner could be locally manufactured.
6. Learned counsel representing the Custom Department adopted the arguments advanced by CEO EDB as well as Technical Manager of Respondents Nos.3-4 and argued that the Petitioner is not entitled to the benefit of stated SRO.
7. Heard and record perused.
8. The basic contention of the learned counsel for the Petitioner is that the Petition er is entitled to the benefit of the SRO as the AHU product with its technical specification is not locally manufactured. On this issue, the Petitioner and the Respondent No.2 are in disagreement as Respondent No.2 is of the opinion that local manufactures have the capacity to manufacture the AHU required by the Petitioner . Both CEO EDB and Technical Manager of Respondents Nos.3 and 4 appeared before the Court to explain the record and function of EDB. During the course of their explanation, it was admitted that no physical verification was made to ascertain the statements of local manufacturers, who claimed that they had the capacity to make the AHU required by the Petitioner . It is an admitted position that the AHU required by the Petitioner is a customized product with certain specific components.
The SRO provides that if the goods are not locally manufactured as notified in the CGO issued by Federal Board of Revenue ("FBR") certified by the Engineering Development Board then the benefit of SRO is available to those goods which are imported. CGO No.11/2007 provides the list of local manufactur ers of the AHU at serial No.504 with its specifications and lists the names of two companies, who are locally manufacturing the AHU. Admittedly , the AHUs imported by the Petitioner have specifications different from the ones provided in the CGO. So far as, the names of local manufacturers are concerned, they have issued letters dated 05.03.201 1 and 21.02.201 1 to the Petitioner confirming their inability to manufacture the AHU required by the Petitioner . The Respondents are relying upon the letter dated 03.03.201 1 issued by Cool Point (Pvt.) Ltd stating therein that they can manufacture the AHU required by the Petitioner . They have also relied upon a letter dated 03.03.201 1 issued by Petal Engineering (Pvt.)
Ltd for this purpose. A meeting was held on 17.05.201 1 where the Petitioner along with some manufacturers discussed the issue and it was concluded that the AHU is a customized product and local manufacturers are technically capable to manufacture the AHU required by the Petitioner . Another meeting was held on 09.06.201 1 where the capability of the local industry was again confirmed and it was decided by Respondent No.2 that it is the local capacity which has to be seen and not what has been supplied so far. They decided that the technical specifications of any equipment have no nexus with the project requirement or the quality of a product. They also decided that capability of local manufact urers meant that the Petitioner could not avail the benefit of the SRO.
Having gone through the specific letters and documents relied upon by the parties I am of the opinion that Respondent No.2 has misconceived its role for the purposes of ascertaining whether or not the AHU required by the Petitioner is locally manufactured. Respondent No.2 has simply relied upon the statement of local manufacturers and totally disregarded the technical requirements of the Petitioner for the purposes of its business.
The FBR offered an incentive by virtue of the SRO on the basis of which it gave a concession with respect to import of goods which were not locally manufactured. Clearly this is to encourage the local manufacturers. The SRO requires for the product to be locally manufactured and in this regard, Respondent No.2 must physically verify the manufacture of the product. Merely relying upon statements of manufacturers does not justify the position taken by EDB. Furthermore, the record shows that uptil 2009 the EDB itself acknowledged that the AHU was not locally manufactured. Although they claimed that this was a one time situation, which subsequently changed, they have not been able to show how they have reached this conclusion and whether they verified the statements of the local manufacturers.
9. Another aspect of this Court is that the EDB is misconceived in its understanding that the technical specifications of the equipment or the quality of the product are not relevant for the purposes of the SRO. The EDB is required to certify that a particular product is locally manufactured and in doing so it must understand the requirements of the Petitioner . The Petitioner is entitled to carry on its business in the best possible way and if a customized machine essential to its business has not been locally manufactured, Respondent No.2 was obligated to certify accordingly .
Merely relying on the statements of local manufacturers without physical verificatio n of the technical and qualitative aspect was in disregard of their basic function which is to certify that the product is locally manufactured.
10. Under the circumstances, this petition is accepted. The EDB is directed to provide certificate to the Petitioner immediately that the product is not locally manufactured and the Respondents are directed to grant the benefit of stated SRO to the Petitioner in terms thereof.